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Growth outlook remains strong

Quick Pointers:

* October jewellery demand remains strong, higher gold prices to impact margins. Revenue growth for full FY26 will be higher than EBIT growth

* Caratlane and TEAL report EBIT growth of 79% and 112%

TTAN reported strong 2Q26 with 18% Adj jewellery sales growth, strong watch margins of 16.2% and EBIT growth of 79% in Caratlane and 112% in TEAL. We remain constructive on the medium-term outlook driven by 1) strong start to 3Q as consumers adjust to higher gold prices 2) higher growth of studded likely traction in 18 carat jewellery 2) continued market share gains in key regions such as the East and South despite a highly competitive landscape, and 4) strong performance in Caratlane and TEAL.

TTAN’s long term outlook too remains positive given 1) sustained focus on improving product mix will enable maintain current margin levels and strong new buyer growth, even as we reduce margin estimates to 11.1% (11.3-11.5% earlier) 2) change in focus on light weight jewellery (9k and 14k) to cater to sub Rs50,000 consumer will drive value growth and 3) Watch business to continue see strong momentum in medium to long term led by unique designs and innovations. We estimate 20.6% EPS CAGR over FY26-28. We value Caratlane/TEAL at Rs200/60 per share and arrive at SOTP based target price of Rs4397 (Rs3902 earlier). Retain Buy

Standalone- Revenues grew by 25.1% YoY to Rs165.3bn (PLe: Rs151.97bn); Sales ex of bullion increased by 18.1%. Gross margins expanded by 58bps YoY to 20%. EBITDA grew by 43% YoY to Rs16.2bn Margins expanded by 122bps YoY to 9.8% (PLe:11.5%). Adj. PAT grew by 42.7% YoY to Rs10.1bn (PLe: Rs11.1bn)

Jewellery revenues grew 26.6% YoY to Rs147.4bn; EBIT grew 13% YoY to Rs13.8bn; margins contracted 113bps YoY to 9.4%. EBIT margins ex of bullion was 10.8%, 65% growth in coin sales impacted margins. Bullion sales were 19.59bn in 2Q up 32.5% QoQ. Studded ratio at 34% was flat YoY. Tanishq added 6 stores, taking the total to 510 stores. Gold jewellery sales increased by 13% while studded sales increased by 16%. Consumers adjusted to higher gold prices and Gold exchange activation scheme was well received by the consumers.

Watches and Wearables revenues grew by 13.1% YoY to Rs14.7bn; EBIT grew by 23.2% YoY to Rs2.4bn; margins expanded by 134bps YoY to 16.2%. Analog volumes grew by 12% YoY aiding in overall growth contribution in the segment. The ASP rose by 8% YoY. mart Watches segment was lower by 22% YoY led by drop in volumes whereas ASP were higher compared to Q2FY25. The same store retail growth across key retail formats was in healthy double digits. Titan World added 5 new stores and 6 new stores in Helios respectively

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