Titan bets on studded jewellery, premium watches and eyewear to drive growth

ET Intelligence Group: Titan Company reported strong revenue and profit growth in the September quarter, supported by buoyancy in studded jewellery despite flat buyer growth. The watches-to-jewellery-to-eyewear company expects buyer growth to improve as gold prices stabilise, aided by a prolonged wedding season. Lower-carat and lightweight jewellery offerings are also helping attract value-conscious consumers.

Strong traction in studded jewellery, which now accounts for 35% of sales, continued expansion of Tanishq and CaratLane, premiumisation in watches, improving profitability in eyewear and rapid growth in Titan Engineering & Automation (TEAL) are expected to drive future earnings. Titan shares rose 3.6% over three trading sessions following the quarterly results announced on Thursday.

Consumer gold purchases were impacted during the quarter by elevated and volatile gold prices. While stable gold prices are necessary to bring customers back to stores, affordable jewellery formats such as 18K, 14K and lightweight collections should help widen Titan's customer base and improve volumes over time.


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Studded jewellery remains one of the company's strongest growth drivers. The category grew 32% year-on-year during the quarter, compared with 16% growth a year ago, aided by design-led collections and diamond-focused campaigns. The segment also has significant headroom for further penetration.

Beyond jewellery, Titan's watches division witnessed strong demand for premium analogue watches and products in the Rs 25,000-Rs 1 lakh segment, helping the business deliver stronger revenue and margin expansion. According to the management, festive demand trends remained healthy after the September quarter.

TEAL, the company's precision engineering business, has been benefiting from opportunities in aerospace, electronics, semiconductors and new-energy applications, delivering strong revenue growth and margin expansion. The segment's growing scale is expected to diversify Titan's earnings profile beyond its jewellery business.

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Motilal Oswal Financial Services remains positive on jewellery industry growth and expects Titan to gain market share through initiatives such as its exchange programme. The brokerage believes rising formalisation of the jewellery business and stable gold prices could further improve growth visibility and margins. It has maintained a 'Buy' rating on the stock with a target price of Rs 5,700.

Prabhudas Lilladher, on the other hand, has downgraded the stock to 'Accumulate' and cut its target price by 1% to Rs 5,330, citing rich valuations following the recent rally. However, it remains confident about the company's medium-term earnings growth trajectory.