Despite a robust wedding season and sustained consumer interest, the jewellery industry is witnessing a sharp decline in volumes—down over 30 per cent—as gold prices have surged more than 70 per cent year-on-year (Y-o-Y), according to a recent channel by PL Capital.
However, demand patterns are evolving, with consumers increasingly opting for lower grammage, 18-karat gold, lightweight designs, and studded jewellery to manage higher costs.
The brokerage has reiterated ‘Buy’ on Titan with a target of ₹4,397, as it sees the company’s jewellery margins have likely bottomed out and expects the company to deliver sales/earnings per share (EPS) compound annual growth rate (CAGR) of 16.1 per cent/20.6 per cent over FY26–FY28.
Additionally, the company is focusing on expanding in Tier-2 and Tier-3 cities, where it is well-positioned to capitalise on the potential slowdown of regional players and gain market share, noted PL Capital.
Shift in buying patterns amid skyrocketing gold prices
Jewellery demand is anticipated to see an uptick in H2FY26, given the higher number of weddings, up by 7-8 per cent.
PL Capital’s analysis has identified 42 auspicious wedding dates across H2FY26, compared to 45 in H2FY25, down by 6.6 per cent Y-o-Y as per the Hindu calendar. However, total weddings are expected to cross 4.5 million in H2 as compared to 4.2 million in H1FY25, which will enable high double-digit sales value growth despite volume headwinds from elevated gold prices.
Though the brokerage believes that elevated gold prices have led to a cut in the grammage of gold bought by the consumers, the value spent has remained intact. Consumers have started opting for lower carat jewellery as consumers are now open to even buying 18/14 carat jewellery, more so in the daily wear segment. PL Capital also noticed a rising number of stores of lab-grown diamond (LGD) and consumer acceptance of LGD in daily wear jewellery.
Meanwhile, retailers continue to see strong demand for gold coins. Investment demand is seeing healthy traction with volume growth for coins likely to be in the high single to low double digits as opposed to a decline in volume of jewellery, PL Capital noted.
Rising gold prices squeeze local jewellers, benefiting large players
The sharp rise in gold prices is inflating inventory costs across the value chain, making incremental store additions and design refreshes more capital-intensive for smaller players, according to analysts.
Unorganised jewellers, commanding 53 per cent of the market, are facing acute margin compression from record gold prices (up 71.4 per cent year-to-date (Y-T-D) to ₹1,34,000/10g), forcing inventory write-downs, reduced credit availability, and liquidity crunches that curb aggressive pricing or promotions.
As a result, many regional and local players are limiting design offerings and inventory depth, which is starting to reflect in lesser assortments versus large, branded chains. This, according to PL Capital, will accelerate market share consolidation in favour of large and organised jewellery chains.
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