Titan Company shares came under pressure on Friday after brokerage firm Nuvama downgraded its rating on the stock from ‘BUY’ to ‘HOLD’, despite raising its target price. The brokerage has revised its target to Rs 5,241 from the earlier Rs 5,030.
Titan shares ended Friday’s trading session at ₹4,944, down 1.08 per cent. The stock has delivered a strong return over the past year, gaining 42.88 per cent. According to Nuvama, the sharp run-up has reduced the room for further upside from current levels.
The brokerage’s cautious stance comes despite a strong performance by Titan in the first quarter of FY27. The company reported a 36 per cent year-on-year increase in revenue, while EBITDA climbed 57 per cent. Net profit also jumped 65 per cent during the quarter.
Jewellery business drives Q1 growth
Titan’s jewellery segment remained the key growth engine during the quarter. Revenue from the business increased 43 per cent to ₹15,900 crore. Domestic jewellery revenue grew 38 per cent, while like-for-like growth stood at 33 per cent.
The company attributed the performance to healthy wedding-season demand and strong sales during Akshaya Tritiya. Titan also reported a 5 per cent increase in new buyers following changes in customs duty, while the average ticket size increased 31 per cent.
Gold exchange transactions accounted for more than half of jewellery revenue during the quarter. Titan added four Tanishq stores, 17 Mia outlets, 11 CaratLane stores and one beYon store in India during Q1.
Within the jewellery portfolio, plain gold sales rose 35 per cent year-on-year, while studded jewellery increased 34 per cent. Sales of coins recorded a sharper 65 per cent rise.
CaratLane posts strong growth
CaratLane also delivered a strong quarter, with revenue increasing around 41 per cent. Its EBIT margin improved to 11.5 per cent from 6.6 per cent a year earlier.
The improvement was partly supported by the impact of customs duty changes. Excluding this benefit, CaratLane’s EBIT margin was around 10.1 per cent, representing an improvement of roughly 350 basis points year-on-year.
Nuvama pointed out that Titan’s jewellery EBIT included an inventory gain of around ₹370 crore. The company also benefited from a mark-to-market gain of approximately 75–80 basis points on inventory valuation amid movements in gold prices.
The brokerage expects this MTM benefit to moderate over the next two to three quarters. However, it believes the advantage from customs duty changes could continue for another two quarters.
International jewellery business remains a concern
Titan’s international jewellery business recorded a 136 per cent increase in revenue. However, the segment posted an EBIT loss of ₹8 crore, with geopolitical developments in the GCC region weighing on performance.
Management has indicated that there are early signs of a recovery in the business. In North America, operations expanded 85 per cent during the quarter. By the end of Q1, Titan had 32 international stores and 122 Damas stores.
Watches and eyewear businesses continue to growTitan’s watches business reported 22 per cent growth during the quarter, supported by strong demand for premium products. Sales under both the Titan and Fastrack brands increased by around 20 per cent.
The company added 34 watch stores during the quarter, including nine Titan World outlets, nine Fastrack stores, 14 Helios outlets and two Helios Luxe stores.
Titan’s eyecare business also grew 22 per cent, helped by double-digit growth in premium products and an increase in average selling prices.
Despite the strong Q1 performance, Nuvama’s downgrade reflects its view that much of the positive momentum is already reflected in Titan’s share price following the recent rally.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to consult a qualified financial advisor before making any investment decisions.
