IGI Logo

We maintain ADD on TTAN and TP of Rs5,350, as the 9% earnings miss in Q4 was due to high losses in international subsidiaries and a one-time bonus payout to employees for a stellar FY26 (~Rs2bn combined impact). TTAN reported robust Q4 topline growth of ~54% in the jewelry business (~50% LTL), though EBIT growth was ~40%, as margin was expectedly impacted due to the spike in gold prices. Encouragingly, recovery in buyer growth has enabled revenue growth pick-up (vs 9M trends), aided by an aggressive exchange program, introduction of accessible jewelry options (9/14/18 karat), and strong traction for its new gemstone collection 'Hues’ at entry price points. Buoyed by India’s growth potential, accelerating formalization, and superior brand trust, TTAN expects to deliver 15-20% topline CAGR over the next 5 years. Its domestic jewelry EBIT margin stabilized at 11.2% in FY26, despite an elevated gold price environment. Our FY28 estimates are largely unchanged, while we cut FY27E EPS by ~6% on factoring in geopolitical tensions in the ME and debt increase on the consolidation of Damas acquisition. TTAN does not foresee any major gold supply disruptions, due to the ongoing ME conflict. The stock currently trades at a discount to other discretionary peers, which should gradually narrow, in our view, with better or in-line execution (Exhibit 1).

Robust momentum continues; buyer growth turns positive

Standalone revenue grew ~41% YoY in Q4 (ex-bullion sales), led by 48% growth in the jewelry segment. Eyewear and Emerging businesses also delivered double-digit growth, at 16-21% YoY, while watches growth was slower at ~8%. Growth in the jewelry business was driven by higher ticket size (up ~40% YoY) and resurgence in buyer growth at 8% in Q4, improving significantly vs the flattish/declining trend in Q3/H1. The international jewelry business (ex-Damas) grew 42% YoY, driven by 65% growth in US operations, supported by network expansion. GCC operations also recorded healthy ~40% YoY growth, although momentum was impacted due to geopolitical tensions. The Watch segment saw slower growth, at ~8% YoY, while the Eyecare segment saw a customerlevel growth of 15% YoY, led by double-digit ASP growth. Among subsidiaries, TEAL continued its strong momentum, with ~60% YoY growth. CaratLane’s growth moderated to 22% (vs ~32% for 9M) largely due to temporary internal operational challenges, with trends already normalizing in April. Store additions have remained healthy in Q4, with addition of 12/14/6 Tanishq/Mia/CaratLane stores, respectively

Margins remain key monitorable

Domestic jewelry EBIT margin (including CaratLane) at 11.1% was down by ~40bps YoY largely due to adverse product mix. EBIT growth of ~41% in Q4 was robust and among the best in the discretionary universe. The management highlighted that sustaining current margin levels could become challenging if gold prices continue to rise, although it is undertaking multiple initiatives, such as lightweight jewelry, 14k/18k jewelry, and mix re-engineering, to mitigate the impact. FY26 jewelry EBIT margin at 11.2% is near the mid-point of the guided band of 11.0-11.5%

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354