What higher gold prices have meant for Titan's Q4 performance

Mint

09-05-2025

Gold prices are flirting with the ₹100,000 per 10gm mark, making many Indian consumers rethink their jewellery purchases, a trend that could impact retailers like Titan Co. Ltd. In its March quarter (Q4FY25) earnings call, the management noted that consumer sentiment has been particularly affected in the sub- ₹50,000 price band, especially for gold items, with some impact seen in studded jewellery as well.
One reason is that as gold prices rise, some products previously priced under ₹50,000 shift to a higher bracket. Against this backdrop, the company expects 'more and more customers to be open to lower caratage, simply because the price point has become quite a bit."
In the higher price bands, some consumers are adjusting by opting for simpler products. In other words, while they're still purchasing gold at a set value, they're opting for items with lower making charges. Overall, consumers still want gold, but within their budgets; and are looking for solutions such as lightweight or lower-carat jewellery, along with possibly lower making charges, Titan said.
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Rising gold prices in Q4FY25 and FY25 have continued to impact Titan's overall product mix, resulting in about 300 basis points (bps) lower studded jewellery share for the quarter and about 190bps lower share for the year. Elevated gold prices and consumer preferences last quarter meant higher coin growth, impacting the product mix and margins.
Still, Titan's margin performance in Q4 was encouraging, aided by relatively better overheads management and strong revenue growth. The company's jewellery Ebit (earnings before interest and tax) margin contracted just 25 basis points year-on-year to 11.9% last quarter. Q4 jewellery Ebit growth was 22% to ₹1,331 crore.
'Despite rise in gold price and heightened competitive intensity, Titan is showing early signs of margin stability," said analysts from ICICI Securities Ltd in a report dated 9 May, adding, 'In our view, jewellery margin has bottomed out and should see gradual improvement going ahead."
Titan's standalone Q4 jewellery revenue, excluding bullion sales, were up 25% year-on-year at ₹11,232 crore, underpinned by about 27% growth in plain gold jewellery and about 64% rise in gold coins. The growth in gold jewellery segment was primarily driven by ticket size growth, while both studded and gold coin segments saw rising buyer numbers.
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Titan's second key business, watches and wearables, performed well, posting a 20% revenue growth to ₹1,126 crore. This was driven by an 18% increase in domestic analogue watches and robust double-digit growth in the Helios channel, which features premium Titan and international brands. As a result, the watch Ebit margin expanded by 330 bps to 11.8%.
Overall, Titan's standalone Q4 operating revenue and Ebitda grew 20% and 30%, respectively, reaching ₹13,477 crore and ₹1,438 crore. The market responded positively to these results, driving Titan's stock up by around 4% on Friday, even as the Nifty 50 fell 1%. Looking ahead, Titan targets double-digit revenue growth in FY26, though sustained high gold prices could pose short-term challenges.
'We cut our FY26 earnings per share (EPS) estimates by about 1% due to higher interest and depreciation expense, while we increase FY27 EPS estimates by about 2% led by improved Ebitda margin and expected reduction in interest expenses on lower debt and GML (gold metal loan) rate normalization," said analysts from JM Financial Institutional Securities Ltd.
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The broking firm has increased its price-to-earnings multiple from 55x (earlier) to 57x led by stability in margins; and 15%, 27% and 33% compound annual growth rate in revenue, Ebitda and net profit over FY25-27. JM's target price is ₹3,725 apiece, while the stock now trades at about ₹3,505.
Investors should bear in mind that consistently elevated or rising gold prices may dampen volume-led gains in the near-to-medium term, particularly if competition remains high.