Titan's Shine Dulls: Why the Stock Tumbled Over 5% Despite 20% Growth

Titan Company, a darling of long-term investors and a heavyweight on the Nifty 50 index, saw its stock price tumble on Tuesday, leaving many wondering what went wrong. Despite reporting a solid 20% year-on-year (YoY) growth in its overall consumer business, the stock plunged over 5%, becoming the top loser on the Nifty 50.

The culprit wasn’t a loss or a major scandal, but a classic case of high expectations meeting a complex reality. The company’s Q1 FY26 business update, released after market hours on Monday, contained details about its core jewellery business that the market found hard to digest. Let’s dive into what happened and why it matters to you as an investor.

The Headline vs. The Details

On the surface, Titan’s update for the quarter ending June 30, 2025, looked positive. A 20% YoY growth in the consumer business is nothing to scoff at. The company even expanded its retail footprint by a net of 10 stores, bringing its total to 3,322 outlets globally.

However, the devil, as they say, is in the details. For Titan, the jewellery division is the crown jewel, contributing the lion’s share of its revenue and profits. And it was here that the numbers, while still showing growth, fell short of the market’s lofty expectations.

The domestic jewellery business, which includes powerhouse brands like Tanishq, Mia, and Zoya, grew by approximately 18% YoY. While this sounds healthy, analysts had penciled in higher growth. This miss was the primary trigger for the sell-off. The stock, which had closed strongly on Monday, fell sharply at the opening bell and hit an intraday low of ₹3,455.90 before closing the day with a significant drop of over 5% on the NSE.

Why Did the Jewellery Segment Underperform?

Titan’s management pointed to one major factor: volatile gold prices.

The period from May to mid-June saw a sharp increase in the price of gold, which directly impacted consumer behaviour. Here’s how:

1. Softening Demand: The sudden price spike made many potential buyers hesitant. Titan noted a “softening in customer purchases” during this period, even though the Akshaya Tritiya festival earlier in the quarter had seen good sales.
2. Flat Buyer Growth: The number of customers walking into Tanishq and CaratLane stores was flat compared to the same period last year. This indicates that growth came from higher-value purchases per customer, not from attracting more buyers.
3. Shift in Preference: Faced with higher prices, customers became more budget-conscious. They opted for lighter-weight jewellery or pieces with lower gold purity (karatage). While this keeps the sales counter ringing, these items typically carry lower profit margins.
4. Lower Studded Ratio: The sales mix tilted away from high-margin studded jewellery towards plain gold items and coins, which offer thinner margins.

This combination of slower-than-expected growth, flat footfalls, and a shift to lower-margin products was enough to make investors nervous about the segment’s profitability for the quarter.

A Mixed Bag Across Other Segments

While jewellery stole the spotlight for the wrong reasons, other parts of Titan’s empire performed quite well.

• Watches & Wearables: This segment was a star performer, clocking a robust growth of around 23% YoY. Strong sales in analog watches from brands like Sonata and Titan, along with healthy double-digit growth in Fastrack, drove this performance.
• International Business: The global expansion story continues to be a bright spot, with a massive 49% YoY growth, led by a near-doubling of Tanishq’s business in the US market.
• EyeCare: The EyeCare division grew by a respectable 12%. However, the segment also saw a net closure of stores as part of a network rationalization.
• Emerging Businesses: Smaller divisions like Fragrances (SKINN) and Women’s Bags also showed impressive momentum.

What Analysts Are Saying

The market’s reaction was echoed by brokerage houses. JPMorgan reportedly called the jewellery segment’s performance “worse than feared,” flagging potential margin risks.

However, it’s not all doom and gloom. Most analysts view this as a short-term blip rather than a long-term structural problem. Some brokerages maintained their ‘buy’ or ‘overweight’ ratings, believing the brand’s strength and long-term growth story remain intact.

From a technical standpoint, the stock has broken below its key short-term moving averages, suggesting a bearish sentiment for now. The next major support level for the stock is seen around the ₹3,400 mark.

What to Watch Next

For investors holding or watching Titan, here are a few key things to keep an eye on:

• Gold Price Stability: The primary headwind was gold price volatility. If prices stabilize, it could encourage consumers to return to their normal purchasing patterns.
• Upcoming Festive Season: The next quarter leads into the all-important festive and wedding season in India. A strong performance during this period could help the company recover from the Q1 slowdown.
• Management Commentary: Pay close attention to the official Q1 results announcement and the management’s commentary on margin pressures and the demand outlook for the rest of the year.
• Peer Performance: Keep an eye on the results of other listed jewellery players to see if Titan’s experience was an industry-wide phenomenon or specific to the company.

The sharp fall in Titan’s stock is a reminder that even the strongest companies are not immune to market sentiment and macroeconomic factors. While the long-term story may still be compelling, the short-term path could be choppy.

This article is for informational purposes only and does not constitute investment advice. Please conduct your own research before investing.