Synopsis : Nomura has retained its ‘Buy’ rating on Titan Company and raised its price target to Rs 5,425 from Rs 5,000, implying around 10% upside from the current market price. The brokerage’s optimism comes despite elevated gold prices, with Titan’s Q1 FY27 performance showing strong jewellery demand, improving margins and a recovery in buyer growth.
Titan Q1 FY27 performance beats expectations
Titan reported a 63% year-on-year increase in consolidated net profit to Rs 1,777 crore in Q1 FY27.
Total income rose 40% year-on-year to Rs 20,753 crore, supported by strong jewellery demand during the festive season and Akshaya Tritiya.
Jewellery revenue, excluding bullion, increased 43% YoY to Rs 18,253 crore.
Other segments also delivered healthy growth, with:
- Jewellery revenue up 41%
- Watches revenue up 21%
- Eyewear revenue up 21%
- Emerging businesses revenue up 36%
This translated into strong EBIT growth across the major businesses.
Buyer growth makes a comeback
One of the key positives for Nomura was the recovery in customer growth.
Titan's buyer growth reached 5% year-on-year during the quarter, after remaining flat in the previous year.
The average ticket size for Tanishq, Mia and Zoya increased 31%, although this was partly helped by the roughly 60% rise in gold prices.
Nomura said buyer growth was strong during April, weakened in May amid government interventions and seasonal factors, and recovered again in June as gold prices softened.
Despite expensive gold, overall buyer growth remained resilient.
Why isn't high gold hurting Titan as much?
This is arguably the most important part of Nomura's thesis.
Higher gold prices have pushed up jewellery ticket sizes, while Titan has continued to attract customers through its established brands and product mix.
The brokerage also highlighted improving studded jewellery sales. Studded sales increased 34% YoY, helped by softer gold prices during parts of the quarter.
At the same time, natural diamond prices remained stable, while concerns around competition between lab-grown and natural diamonds appeared to ease.
Nomura believes the two segments can coexist because they cater to different customer requirements.
Margins remain on track
Titan's jewellery margins also provided comfort.
Adjusted EBIT margins, excluding one-off customs duty gains, stood at around 11.7% for Tanishq, Mia and Zoya and 10.1% for CaratLane.
These figures were broadly in line with or above management's guidance of 11% for TMZ and 10% for CaratLane.
For Nomura, this suggests Titan is maintaining profitability even in a challenging gold-price environment.
Nomura raises earnings estimates
Following the strong Q1 performance, Nomura increased its FY27–FY29 EPS estimates by 3%.
The brokerage now expects Titan to deliver approximately 22% EPS CAGR between FY26 and FY29.
The broader argument is that Titan still has significant long-term growth headroom, supported by jewellery market formalisation, premiumisation, store expansion and its established brands.
Titan share price performance
Titan shares have gained:
- 1.8% in the last five trading sessions
- 10.4% over the past month
- 18.6% over six months
- More than 45% over the past year
The key question for investors now is whether Titan can maintain its strong growth despite elevated gold prices and a high comparison base in the second half of the year.
Bottom line
Nomura's bullish view is based on strong Q1 earnings, recovering buyer growth, resilient jewellery demand, healthy margins and continued long-term growth potential.
High gold prices remain a risk, but Titan's ability to maintain customer growth and improve its product mix has so far provided reassurance.
The brokerage therefore believes the recent performance supports a higher valuation, raising its target price to Rs 5,425.
Disclaimer: This article is based on third-party brokerage research and is intended for informational and educational purposes only. The rating, target price and estimates mentioned are those of Nomura and should not be considered investment advice or a recommendation to buy or sell Titan Company shares. Investors should conduct their own research and consult a SEBI-registered financial adviser before making investment decisions.
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