Titan Company - Robust Growth; Improving Mix to Drive Margins | Initiating Coverage Report

Titan delivered another strong quarter with Jewellery business (India) reported revenue growth (ex. Bullion) of 38%, despite an unfavorable operating environment, with healthy volume and buyer growth across its portfolio. Jewellery remains the key growth engine, supported by studded jewellery recovery, exchange-led customer acquisition, premiumization and significant market-share headroom. Going ahead, the company expects double-digit jewellery revenue growth. While the Rs 4.1bn customs-duty benefit and 75–80bps MTM gain provides near-term reported margin support, these are temporary and should be excluded while assessing underlying profitability. The company believes normalized jewellery margin at ~10.9% remains close to the ~11.0% “centre of gravity”, with H2 margin improvement expected from richer studded mix, lower coin contribution, lower-carat acceptance and GM initiatives. We expect Titan’s Jewellery business to sustain strong double-digit revenue growth over the medium to long term, supported by its FY30 growth ambitions, market-share gains and favourable mix shift. Key monitorable include gold-price volatility, plain gold demand, competitive intensity, recovery in the IB and margin normalization as temporary inventory benefits reverse. Given the strong growth outlook and robust business fundamentals, we value the company at a premium 65x FY28E EPS, arriving at a target price of Rs 5,270. We initiate coverage on Titan Company with an ‘Accumulate’ rating.

Titan Company Ltd. (TITAN) Stock Price Chart

Q1FY27 Performance:

Revenue below; EBITDA and APAT ahead of consensus estimates: Net revenues grew by 24.3% YoY to Rs 181.0bn (ex. bullion revenue grew by 37.5%). 3-Yr revenue CAGR stood at 17.5%. GM (incl. bullion) expanded by 290bps YoY to 24.2% in Q1FY27. A 290/20bps decline in RM cost/employee exp was partially offset by 10bps increase in ad spends. Consequently, EBITDA margin (incl. bullion) contracted by 300bps YoY to 14.2%. EBITDA (incl. bullion) grew by 57.1% YoY to Rs 25.6bn. APAT (incl. bullion) grew by 65.0% YoY to Rs 17.0bn.

Segment Wise Performance:

Jewellery: Excluding bullion, Jewellery revenue grew 38.4% YoY to Rs 169.4bn, while EBIT increased 70.5% YoY to Rs 23.7bn, with EBIT margin expanding 260bps YoY to 14.0%. The company added 6/17/1/11 stores across Tanishq/Mia/beYon/CaratLane, respectively. Watches: The Watches segment grew 21.7% YoY to Rs 15.4bn, with EBIT of Rs 3.0bn. EBIT margin declined 340bps YoY to 19.2%, while the company added 9/9/14/2 stores across Titan World/Fastrack/Helios/Helios Luxe, respectively. Eyewear: Eyewear revenue increased 21.6% YoY to Rs 2.9bn, with EBIT rising to Rs 260mn and EBIT margin improving 20bps YoY to 9.1%. The company added 6/1 stores across Titan Eye+/Runway, respectively.

Outlook:

We expect Titan to sustain strong medium-term growth, led by robust jewellery demand, market-share gains, store expansion, premiumisation and healthy product mix. Strong traction across key jewellery brands, along with growth in Watches and emerging businesses, should support earnings, while higher studded mix, making charges, pricing and operating leverage aid margin expansion.

Valuation:

We forecast a Revenue/EBITDA/PAT CAGR of 14.3%/23.0%/24.8% over FY26–FY28E. We initiate with ‘Accumulate’ rating on Titan Company, supported by its strong brand equity, leadership in organised jewellery, extensive retail network and superior execution across key businesses. Continued market share gains, aggressive store expansion, premiumisation and increasing penetration of studded jewellery provide strong long-term earnings visibility. Given the strong growth outlook and robust business fundamentals, we value the company at a premium 65x FY28E EPS, arriving at a target price of Rs 5,270.

Company website: https://www.titancompany.in/

Click to download the full Titan Company Q1FY27 Review Analysis

Analyst:

• Sachin Bobade - HOR, Institutional Equities
• Akshay Patel - Senior Research Associate, Institutional Equities

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Titan Company Q1FY27 Results: Frequently Asked Questions Answered

What were Titan Company’s Q1FY27 results?

Titan reported revenue of ₹181.0 billion, up 24.3% year-on-year. EBITDA increased 57.1% to ₹25.6 billion, while adjusted profit after tax rose 65.0% to ₹17.0 billion.

How did Titan’s jewellery business perform in Q1FY27?

Jewellery revenue excluding bullion grew 38.4% year-on-year to ₹169.4 billion. EBIT increased 70.5% to ₹23.7 billion, and EBIT margin expanded by 260 basis points to 14.0%.

What is the target price and rating for Titan Company?

The supplied research initiates coverage with an Accumulate rating and a target price of ₹5,270, implying approximately 7% upside from the reference price used in that report.

What factors could support Titan’s future growth?

The research highlights jewellery demand, market-share gains, store expansion, premiumisation, studded jewellery penetration and operating leverage as potential growth drivers.

What are the key risks for Titan Company?

Key monitorables include gold-price volatility, plain-gold demand, competitive intensity, international business recovery and the normalisation of margins as temporary inventory-related benefits reverse.

Are Titan’s reported margin benefits expected to continue?

The research identifies a ₹4.1 billion customs-duty benefit and a 75–80 basis-point mark-to-market gain as temporary supports. These should be excluded when assessing underlying profitability.

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