Titan Company Ltd has made a strategic entry into the lab-grown diamond (LGD) jewellery segment with its new brand 'beYon', a move that has been met with investor optimism. The company's shares soared to an all-time high of ₹4,312.10 on Wednesday, reflecting a gain of around 6% over two trading sessions. This surge is largely attributed to the robust performance of its core jewellery business, as highlighted in its December quarter (Q3FY26) business update.
The Strategic Rationale Behind beYon
In a recent conference call, Titan's management outlined a carefully crafted strategy for its foray into LGD-studded jewellery. A key insight is the company's belief that while loose lab-grown diamonds risk becoming commoditised, finished jewellery made with them does not. Consequently, Titan has no plans for backward integration into LGD manufacturing and will instead source stones from trusted suppliers.
The company identified a significant opportunity in India's under-penetrated studded jewellery market, where diamonds and precious stones are set in gold. This segment currently accounts for only 12-15% of the overall jewellery market. Within this small slice, the share of LGD-studded jewellery is minuscule at 2-4%. Titan aims to expand this niche by offering more accessible price points. The beYon brand is competitively priced at ₹23,000-25,000 per carat, compared to the ₹30,000 per carat charged by many rivals using natural diamonds.
Rollout Plans and Market Positioning
beYon, which opened its first physical store in Mumbai last month, will adopt an omnichannel approach, selling both online and offline. The initial retail rollout is deliberately measured, with plans to open stores only in the metro cities of Mumbai and Delhi. About 10 stores are planned in the coming months, with expansion to non-metro cities dependent on consumer response.
Titan also plans to offer exchange schemes on beYon jewellery, but with a clear caveat: the exchange value will be limited to the gold content of the item, not the lab-grown diamond portion. This policy underscores the different value perception between natural and lab-grown stones.
Addressing potential concerns about internal competition, the management believes beYon is unlikely to significantly cannibalise sales from its other brands like CaratLane and Mia. Instead, it is expected to attract a new segment of customers, thereby expanding Titan's overall addressable market. Analysts from PL Capital support this view, stating, "We believe beYon expands Titan’s addressable market by tapping incremental demand in lab-grown diamonds and fulfills a gap in Titan’s portfolio."
Strong Q3 Performance Underpins Confidence
The optimism around Titan's new venture is bolstered by its stellar quarterly performance. Q3 jewellery sales grew by a remarkable 41% year-on-year, supported by the addition of 47 new stores. This growth was primarily driven by a substantial 55% increase in average gold prices during the quarter, leading to a higher average selling price that offset flattish buyer growth.
A particularly encouraging trend was the acceleration in higher-margin studded jewellery sales, which grew in the mid-20s percentage range year-on-year in Q3, up from 16% in Q2 and 11% in Q1. This strong growth should help the company meet its standalone FY26 Ebit margin guidance (excluding bullion sales) of 11-11.5%.
Following the update, PL Capital raised its earnings per share (EPS) estimates for Titan by about 5-7% for FY26-28, forecasting a compound annual growth rate (CAGR) of around 20% during this period. However, the stock's valuation remains elevated, trading at 54 times its estimated FY28 earnings.
In summary, Titan's entry into the lab-grown diamond space with beYon is not a speculative gamble but a strategic expansion into an underserved market segment. Backed by strong fundamentals from its traditional business, the company is positioning itself to capture future growth without jeopardising its existing brand equity.
