Investing.com — India’s decision to raise import tariffs on and to 15% from 6% is expected to create near-term pressure for jewellery retailers such as Titan Company, though Morgan Stanley believes the company remains well-positioned over the longer term due to its sourcing model, strong brand portfolio and expanding organised retail presence.
The hike is set to impact investment related purchases versus consumption in the short term says a recent Morgan Stanley note. As the import tariff will take domestic gold prices higher, this is a short-term sentiment and business negative for the jewellery industry.
After ~80% inflation in 2025, gold prices were stable for the last two months, having corrected ~5% from the peak. Though there will be some impact on demand from the tariff increase, this impact will be offset by the sharp YoY inflation in gold prices and the inauspicious adhik mass period from May 17 to June 15 during the first quarter of 2027, the firm said.
On May 13 and 14, Titan Company () shares saw a sharp decline in early trading driven by the government’s hike. But this was followed by some recovery. Morgan Stanley believes that any stock price correction on the back of the duty hike, and demand impact, offers a good entry opportunity for long-term investors.
Titan is a part of the Tata Group and evolved from being a watchmaker to a dominant retailer of branded jewellery, with its gold businesses anchored by Tanishq. The gold business is the company’s primary growth engine, driven by premiumisation, wedding demand, gold exchange schemes, and increasing consumer trust towards organised retail jewellery.
“Titan sources 50%+ of its gold from customer purchases (via exchange) and the balance as a mix of metal gold loans and market purchases,” the analysts noted. This allows the company to enjoy some insulation from the duty increase.
In its Q2 business update, Titan linked high gold prices to increasing ticket sizes, despite a slight softening in buyer volumes. Customers are adapting to higher gold prices by shifting towards lighter, lower-carat jewellery.
Titan’s CaratLane brand is already expanding aggressively because younger customers have been showing a preference for lower-carat jewellery. The company has been pursuing aggressive store expansion, allowing it to increase market share in organised jewellery retail.
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