Titan Gains 4% as Budget 2026 Skips Gold Duty Hike

Introduction: A Sigh of Relief for Jewellers

Shares of Titan Company Ltd. surged by up to 4% on February 1, 2026, following the presentation of the Union Budget by Finance Minister Nirmala Sitharaman. The primary driver for this investor optimism was the absence of a much-feared hike in the customs duty on gold. For Titan, a market leader whose jewellery division accounts for the vast majority of its revenue, this policy stability provides a clear runway for growth and removes a significant near-term uncertainty.

The Importance of Stable Gold Duties

The Union Budget 2026 maintained the status quo on the basic customs duty for gold, which was previously reduced from 15% to 6% in the July 2024 budget. That earlier move was aimed at curbing rampant smuggling and making organized jewellery more affordable for consumers. Any reversal of this policy would have been a significant blow to the sector.

A higher customs duty typically leads to an immediate slump in consumer demand as gold prices rise. While organized players like Titan have historically managed to navigate such changes, often benefiting from inventory gains in subsequent quarters as prices adjust, the initial disruption impacts sales volumes and creates market volatility. By holding the duty rate steady, the government has signaled its intent to support a stable pricing environment, a major positive for large, compliant retailers.

Industry Expectations vs. Budget Outcome

Ahead of the budget, industry bodies like the Gem & Jewellery Export Promotion Council (GJEPC) had advocated for further policy support. Their key demands included an additional reduction in the import duty on gold, silver, and platinum from the current 6%, a rationalization of the Goods and Services Tax (GST) on gold to 1.25%, and the introduction of a tax refund scheme for tourists to boost exports.

While these specific demands were not addressed in the budget, the decision to avoid any negative changes was widely welcomed. For a sector heavily dependent on imported raw materials, policy predictability is paramount. The stable duty structure allows companies like Titan to better manage their procurement, inventory, and pricing strategies without the overhang of potential government-induced cost escalations.

Impact on Titan's Financial Outlook

Titan Company has been on a strong growth trajectory, as evidenced by its robust financial performance. The company's consolidated revenue for Q2 FY26 jumped 28.5% year-on-year, with profit after tax surging by 59%. This performance was driven by strong festive demand and growth across all its key segments.

The budget's outcome directly supports this momentum. A stable input cost environment helps protect the company's margins, which had come under some pressure after the last duty cut due to increased competition. It allows the management to focus on strategic priorities such as retail expansion, product innovation, and enhancing market share rather than reacting to sudden policy shifts. The stability is particularly beneficial for its core jewellery brands—Tanishq, Mia, and Zoya—as well as its rapidly growing subsidiary, CaratLane.

Gold Customs Duty: A Recent Timeline

To understand the current context, it is useful to look at the recent history of customs duty on gold.

This table highlights the government's consistent stance over the last 18 months, favouring a lower duty regime to formalize the gold trade.

Broader Implications for the Jewellery Sector

The decision to maintain the current duty structure is a positive for the entire organized jewellery industry. It reinforces the government's goal of reducing the grey market for gold, which thrives when high import duties make smuggling profitable. For organized players who adhere to all tax regulations, a lower duty regime creates a more level playing field, enabling them to compete more effectively on price and quality against unorganized jewellers.

Investor Sentiment and Market Reaction

The immediate 4% rise in Titan's stock price reflects the market's relief and renewed confidence. Investors perceive the lack of a duty hike as a de-risking event for the sector. It allows the market to value the company based on its strong fundamentals—brand equity, retail network, and operational efficiency—rather than speculative policy risks. The positive sentiment also extended to other listed players like Kalyan Jewellers, indicating a sector-wide boost.

Conclusion: Continuity Breeds Confidence

In summary, the Union Budget 2026 has provided a significant, albeit indirect, boost to Titan Company by ensuring policy continuity. The decision to not raise the customs duty on gold removes a major overhang, fostering a stable operating environment. This allows Titan to build on its impressive financial performance and execute its long-term growth strategy with greater certainty, reinforcing its position as a leader in India's consumer discretionary space.