Shares of Titan Company, one of India’s leading jewellery retailers, surged by as much as 5% on Tuesday, making it the second-biggest gainer on the Nifty 50 index. The rise in stock value came after the company reported a strong boost in quarterly revenue, driven by demand for premium jewellery and gold coins.
By 11:20 am IST, Titan’s stock had increased by 3.4%, reaching 3,126 rupees, while the Nifty 50 index rose 1%.
In the January-to-March quarter, Titan’s stock had underperformed the broader market, with concerns that record gold prices would dampen demand in its core jewellery business, which includes plain and studded ornaments as well as gold coins. Despite these fears, high gold prices did not discourage wealthy Indian consumers from purchasing jewellery for weddings or investing in gold.
Titan reported a revenue growth of about 25% for the fourth quarter, slightly surpassing the growth seen in the previous quarter and showing a notable improvement over the same period last year. The growth was primarily driven by a significant increase in sales within the higher price range of the jewellery segment.
The company’s jewellery division exceeded analyst expectations, with J.P. Morgan and Axis Capital both noting the strength in sales. In fact, Axis Capital upgraded its rating of Titan to “add” from “reduce,” citing attractive valuations.
Analysts, on average, maintain a “buy” rating on Titan, according to data from LSEG. This is in contrast to a “strong buy” rating for its competitor, Kalyan Jewellers India.
While Titan has faced pressure on margins recently, mainly due to the higher sales of lower-margin gold coins, this trend highlights stronger consumer interest in gold as an investment. However, analysts at Axis Capital expect Titan’s margins and product mix in jewellery to return to normal levels in the coming quarters, which should improve earnings per share growth over the next few years, from fiscal 2025 to 2027.
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