There’s no crisis. Just a long, awkward pause.
Titan’s Q1FY26 results weren’t poor. Jewellery revenue rose 18% year-on-year. Watches and wearables grew 23%. CaratLane delivered 38% growth. These are good numbers. Some would even call these great numbers. But for a company priced as richly as Titan, the market was looking for sparkle. Instead, it got a flicker.
Let’s start with the basics.
Buyer growth in jewellery was flat. Studded jewellery sales, the margin-rich crown jewel of Titan’s portfolio, were muted. The mix shifted in favour of plain gold, which earns thinner profits. CaratLane, despite strong topline growth, posted just 5% EBIT margin, well below its historical average. And Titan’s most valuable business, jewellery, saw EBIT margins slide to 11.2%.
Blame it on gold. Prices surged 15% during the quarter, and while that raised ticket sizes, it also scared off buyers. Consumers either delayed purchases or downgraded to simpler, lower-karat pieces. Even wedding demand, expected to lift volumes, stayed subdued. Titan was left fighting on both fronts: margin compression and soft volume.
It didn’t help that inventory days rose, or that return on capital employed dropped from 29% to 22% year-on-year. The market took note. Titan’s high valuation, over 65 times forward earnings, had no margin for error.
The Competition Isn’t Waiting
The pressure isn’t just from macro conditions. Titan’s dominance is being challenged from below.
Jewellery rivals like Senco Gold and Kalyan Jewellers are posting strong growth, expanding into Tier 2 and Tier 3 cities with franchise-led models. Lab-grown diamonds are getting traction among younger buyers. Regional brands are sharpening their price points and personalisation efforts.
Titan, meanwhile, is growing. But it is no longer outpacing the field.
Th retail giant’s store additions continued in Q1 with 19 new jewellery outlets, but its once-clear lead is getting blurred by agile competition. Even on the digital side, CaratLane is expanding, but at the cost of profitability.
And for a company priced at over 65 times forward earnings, the expectations are different. Growth can’t just be decent. It has to be dominant.
There’s also the risk of customer fatigue. In an inflationary environment, even aspirational brands need to justify their premium. Titan’s ability to do that, across multiple income bands is being tested.
And with a high base from last year’s strong festive season and duty cut benefits, the rest of FY26 won’t be easy. The margin of safety is thin.
But Here’s What Everyone Might Be Missing
Despite all the above, writing off Titan is a mistake. Mainly because this company’s strength lies not in chasing momentum, but in managing through the slowdowns.
This quarter’s headline miss masks a lot of underlying resilience.
Let’s start with what’s working. Watches and wearables grew 23%, with better product mix and volume. Fragrances and fashion accessories, the smaller categories, jumped 56% and 61% respectively. Even Titan EyeCare, despite net store closures, delivered 12% growth.
Titan’s core is still strong. Tanishq remains the top-of-mind brand for jewellery buyers. Its recall and trust scores are unmatched.
Zoya and Mia continue to push premium and youth-driven collections respectively. And CaratLane, even with margin pressure, is scaling fast across 139 cities with 322 stores.
What really gives the Titan story depth is its ability to think long-term.
Take the recent acquisition of Damas, the century-old Middle Eastern jeweller with over 150 stores across the GCC. For Rs 4,620 crore, Titan has bought itself brand recognition, operational scale and direct access to an NRI-heavy market with higher per capita income and gifting culture. Damas clocked Rs 4,000 crore in FY25 revenue with 12% EBITDA margin.
Integration will take time. But once it starts contributing, most likely from Q3, Titan’s jewellery portfolio will look far more global, diversified and less India-dependent.
And then there’s the wildcard most are overlooking: operating leverage.
Higher gold prices aren’t all bad. They inflate ticket sizes. And once consumers settle into new price bands and demand recovers, the revenue growth comes with minimal incremental cost. That’s your operating leverage and Titan has played that game before.
The same cost base starts yielding better margins as volumes return, especially in studded jewellery. If that recovery aligns with the festive season, Titan’s margin picture can bounce back faster than expected.
So, What Now?
This isn’t a stock to panic over. But it’s no longer the perfect buy-and-forget story either.
Titan is still a great business. Its strategy is intact. Its brand power remains high. And it continues to expand across channels, categories and countries. But the runway isn’t as frictionless as before. It needs consumer confidence to come back, studded jewellery to lead and the Damas bet to pay off.
More importantly, it needs to earn back the importance that investors once gave it freely.
At 65 times earnings, even good companies face high expectations. Right now, Titan is priced for perfection. And this quarter reminded everyone that perfection is not easy to keep up.
Still, when the dust settles, this may prove to be a breather, not a breakdown.
It’s safe to say that Titan hasn’t lost its touch. It’s just pacing itself. And when the buyers return, Titan should prove as to why it’s been one of India’s most consistent wealth creators.
Disclaimer
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.