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We maintain ADD on TTAN and revise up our TP by ~10% to Rs5,600 from Rs5,100 (60x Jun-28E EPS vs 54x earlier). TTAN reported a robust adjusted EBIT growth of ~33% in the standalone jewelry business (TMZ) in Q1; this was a combination of the 38% top-line growth and ~40bps moderation in margin to ~11%. Margin was hit by the gold price volatility (~40bps), as expected. All other segments also reported healthy EBIT growth (113%/21%/16% for Caratlane/Eyewear/Watch). TTAN visibly nullified street concerns around potential growth moderation with the recent dip in gold price, and reiterated its analyst day guidance of more than doubling topline and EBIT over FY26-30 (~20% CAGR). Though TTAN has significantly outperformed NIFTY (LTM), it is trading at a 5-6% valuation discount to DMART/TRENT. In our view, TTAN’s strong track record and best-in-class growth outlook make a strong case for continued re-rating; our revised TP multiple of 60x is closer to its historical average. Our estimates remain largely unchanged, as 1Q adjusted EBITDA was in-line. Reported EBITDA was 25-30% higher than our estimate on account of a ~Rs4bn benefit from customs duty increase and a ~Rs1.5bn MTM gain (~80bps), which is expected to reverse in coming quarters.

Robust topline trend continues; high double-digit growth across verticals

Standalone revenue grew ~36% yoy in 1Q (ex-bullion sales), led by 38% growth in the jewelry segment. Watches/Eyewear/Emerging businesses also delivered double-digit growth, at 18-22% yoy. Growth in the domestic jewelry business (TMZ + Caratlane) was driven by both higher ticket size (up ~31% yoy) and double-digit buyer growth in 1Q. Encouragingly, overall buyer growth in studded (including Caratlane) has outpaced buyer growth in plain gold jewelry in 1QFY27. The international jewelry business (ex-Damas) grew ~65% yoy, driven by 85%/38% yoy growth in US/GCC operations, led by network expansion and healthy LFL retail traction. The Watch segment saw ~22% yoy growth, led by mid-twenties growth in the analog watch category. The Eyecare segment saw a customer-level growth of 21% yoy, led by double-digit ASP growth. Among subsidiaries, Caratlane/TEAL continued their strong momentum, with ~41%/43% yoy growth. Store addition remained healthy, with Mia/CaratLane adding 17/11 stores, respectively, while Tanishq's expansion was a tad slower at 6 stores.

Adjusted margins a tad lower; TTAN expects EBIT margin to hover at ~11%

TMZ’s reported EBIT margin was 14.2% in 1Q while normalized EBIT margin stood at 10.9% (vs 11.3% yoy). Reported margin was aided by i) a ~Rs4.1bn customs duty benefit, which is expected to also flow through in 2Q/3Q, and ii) a ~75–80bps accounting MTM gain due to divergence between international and domestic gold prices (expected to reverse in coming quarters). TTAN expects jewelry EBIT margin to hover at ~11%, helped by focused initiatives to improve gross margins, richer product mix (higher studded mix, higher mix of lower-carat jewelry and lower mix of coins), and cost-cutting initiatives. Caratlane delivered ~10% adj EBIT margin in 1Q (up by ~350bps); Titan expects to deliver double-digit EBIT margin for CaratLane.

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