Titan Slides 4% as Jewellery Growth Misses Estimates in Q2 Business Update

Shares of Titan Company dropped nearly 4% in early trade on Wednesday, making the Tata group jeweller and watchmaker the weakest stock in the Nifty 50, after its quarterly business update showed jewellery sales growing more slowly than analysts had pencilled in.

The stock touched an intraday low of about Rs 4,371, against Tuesday's close of Rs 4,550, and was trading near Rs 4,375 mid-morning, down roughly 3.8%. The Nifty itself was weaker on the day as investors waited on the Reserve Bank of India's policy decision, but Titan's fall was several times steeper than the index's.

Where the numbers fell short

On the surface, the September quarter looked healthy. Titan said its consumer businesses, excluding bullion, digital gold and its engineering arm, grew sales about 25% from a year earlier, broadly what brokerages expected. Jewellery, watches and eyewear each grew by more than 20%.

The disappointment was concentrated in the segment that matters most. Jewellery accounts for the bulk of Titan's revenue, and sales there grew about 21%, against Nomura's estimate of roughly 25%. The core jewellery brands, Tanishq, Mia and Zoya, grew around 20%, also short of that mark. Citi had been looking for growth closer to 27% in domestic jewellery, excluding bullion.

Why growth slowed

Analysts pointed to timing and pricing more than a collapse in demand:

• Festive calendar shift: Part of the festive buying that usually lands in July-September has moved into October-December this year. The Shradh period also fell in the last week of September, a time when many households avoid buying gold.
• High gold prices: With gold near record levels, the base for comparison is already inflated, and some buyers are holding back.
• Gold coins down: Sales of gold coins, an investment-led product, fell by a high-single-digit percentage year on year, though against a strong base.
• Smaller ticket growth: Growth in average ticket size slowed to double digits, compared with high double digits in the April-June quarter.

There was a silver lining in the mix. Studded jewellery grew in the early thirties per cent, helped by diamond-led festive promotions, while plain gold jewellery rose about 20%. Because studded pieces typically carry better margins than plain gold, Nomura said the richer mix could support profitability for the quarter.

Expansion and international growth stay strong

Titan also kept up its pace of store openings, adding 34 jewellery stores in the quarter, similar to April-June, to reach 1,379 outlets. That was well ahead of Nomura's estimate of about 15 new stores. Domestic businesses overall grew 22%, while the international business nearly doubled, up 97% year on year.

Nomura kept its Buy rating on the stock, arguing that growth visibility remains strong despite high base effects and elevated gold prices.

What to watch next

The real test comes with the December quarter, when the delayed festive and wedding demand should show up in sales. If the shift in timing is the main explanation, as analysts suggest, the October-December numbers should bounce back noticeably. If they do not, the market may start questioning whether high gold prices are hurting jewellery demand more than expected.

For buyers tracking prices ahead of Dhanteras and Diwali, our gold rate today page shows the latest city-wise rates.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.