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Diversification buoys confidence on LT growth longevity; BUY

TTAN is gradually gravitating from being the leading Indian jewelry brand to a global lifestyle brand, thus extending its growth longevity. With focused efforts, its share of non-India jewelry businesses is expected to rise, from 14% in FY24 to 17-18% by FY27. The likely share shift would be a result of exponential scaleup of Taneira, International, and wearables (3-4x over FY24-27), whereas growth in Jewelry is likely to remain strong at 15-20% and improve to 20% for watches/eyewear (vs 7-10% over FY19-24). A sudden spike of 15% (3M) in gold price will keep Jewelry EBIT margin at the lower end of the 12-13% band. Product re-engineering and the 'War on Waste-2.0' program should, however, partially offset the pain. On a positive note, TTAN is confident about meeting this strong outlook via internal accruals vs many peers facing liquidity issues. TTAN maintains its watchful stance on the still evolving LGD space. We remain confident on TTAN's prospects, given strong brand trust, capability investments and new business ramp-ups. We retain BUY/TP of Rs4,150 (65x Jun-26 EPS).

Jewelry growth to sustain in Tanishq; Intl./light-weight to grow manifold: TTAN expects continual share gains (150-250bps) and buyer-led CAGR of 15-20% in FY24-27. Buyer growth is likely to be led by network expansion, focus on the 

Near-term margin pain to subside with focused efforts/Gold price stabilization:

With a sudden spike in gold price, TTAN expects its SA Jewelry EBIT margin at ~12% (vs. 12.3% in FY24). But it is re-engineering its products to fully recover its studded margin, with normalization of the gold mix in overall studded jewelry. Despite the consol. gross margin decline of 220bps over FY19-24 due to increase in the jewelry mix and the higher mix of loss-making intl./wearables segments, consol. EBIT margin expanded by 90bps due to operating leverage. Given the imminent margin pressure, TTAN has also initiated a ‘war on waste’ program (2.0), which should partially offset the headwinds.

Watches/Eyewear trajectory to improve with TAM expansion and macro pickup:

TTAN targets an improved growth profile for Watches/Eyewear with 20% CAGR in FY24- 27 (7-10% in FY19-24), enabled by modernization of store network, TAM expansion in value/super-premium space via price parity/new product lines, and further bolstering of leadership position in the mainline analog for Watches and premium single/progressive lenses for Titan Eyewear. FY24 growth of 5% in its Eyewear division was due to weak macros in H2, though double-digit H1 growth was encouraging. Initial trends postexecution of new strategy (Eyewear) are heartening, with ~12% buyer growth in Q1TD

Taneira targets multifold scale-up; expansion to be asset-light: Taneira aims for 3x its FY24 revenue by FY27, helped by expansion (25-30 stores annually on a base of 74 stores), category extension beyond sarees, focus on wedding/festive (~60% of industry sales), and TAM expansion with entry-level cotton/silk sarees starting at ~Rs1,300. Its expansion model is asset light (~82% franchisee stores) and the product value proposition is attractive, with offering of pure designer sarees at affordable prices.

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