Jewellery firms face tough Q2 but Titan Company likely to shine, here's why

Jewellery companies are expected to face challenges in Q2 due to the absence of favourable conditions such as the lower customs duty that benefited them in Q2FY25. However, Titan Company remains committed to expand its market share, particularly in wedding and festive jewellery, where demand remains time-sensitive, says brokerage Nuvama. As consumers adapt to rising gold prices by choosing lower-weight or lower-karat jewellery, or by opting for studded collections, Titan continues its planned expansion, staying in line with its robust FY26 guidance across the industry.

Despite the headwinds, Titan's strategic focus on growth and adaptability to changing consumer behaviour amid rising gold prices positions it well for continued performance in the competitive jewellery market, the brokerage added. The company's ability to maintain healthy margins, despite challenges, underscores its robust operational framework and market strategy.

Titan Company Limited reported an increase in jewellery sales for the first quarter of FY26, primarily driven by a notable 32% year-on-year surge in gold prices. The substantial rise in gold prices, although boosting revenue through price increments, has exerted pressure on sales volume and buyer numbers. Despite this, Titan has maintained its ability to preserve margins while continuing to invest in growth. The company's international portfolio also reported a positive EBIT for the first time, reflecting its resilient performance abroad.

Titan's EBIT margin for the quarter came in at 11.5%, thanks to a one-off hedging benefit. Without this benefit, the EBIT margins were at the lower end of management's guidance of 11%, a fall of 20 basis points compared to Q1FY25.

Management indicated that "EBIT margins shall be in the range of 11–11.5% and their preference is to focus on growth first followed by profitability."

The decline in margins was primarily due to a decrease in the growth of the studded jewellery segment, which resulted in a compression of the studded share in revenue by approximately 130 basis points. In addition, a 46% increase in coin sales was noted.

Caratlane, one of Titan's subsidiaries, reported a remarkable 39% year-on-year growth in Q1, fuelled by a significant 20% increase in same-store sales growth, highlighting its impressive rebound from the previous quarter.