Investment Rating - The report maintains a Neutral rating on Titan due to demand uncertainty in FY26E caused by elevated gold prices and rich valuation [5][41]. Core Insights - UBS's Basic Materials team forecasts gold prices to rise to US$3,500 in 2026, driven by tariff uncertainty, weak growth, high inflation, and geopolitical risks [2][9]. - India's gold demand is expected to moderate to approximately 725 tonnes in FY26, a 7% year-on-year decline, before recovering to 800 tonnes in FY27 as household consumption stabilizes [4][23]. - Indian households hold the largest stock of gold globally, estimated at 25,000 tonnes, valued at around US$2.4 trillion, which is 56% of FY26 nominal GDP [3][13]. Summary by Sections Gold Price Forecast - Gold prices are projected to increase significantly, with annual averages expected to reach US$3,500 in 2026, reflecting a 23% increase from previous estimates [12]. Consumer Demand for Gold - Consumer demand for gold in India is anticipated to soften in FY26, particularly in jewellery, which constitutes 70% of total demand, expected to decline by 5-10% year-on-year [4][23]. - Retail investment demand remains strong, with a notable increase in gold bars and coins, driven by gold's performance as a safe-haven asset [20]. Economic Context - India's net gold imports are projected to remain high at US$55 billion to US$60 billion in FY26/27, accounting for 1.2% of GDP, despite a manageable current account deficit [40]. - The report highlights that the upcoming pay boost of approximately US$55 billion could support household consumption and stabilize gold demand [39][23]. Gold Mobilization Efforts - Policy initiatives aimed at mobilizing gold for productive uses have seen limited success, with households primarily using gold as collateral for loans [42][45]. - The Gold Monetization Scheme and Sovereign Gold Bonds have not achieved significant participation, leading to a discontinuation of some programs [44][45]. Company-Specific Insights - Titan is expected to pursue aggressive network expansion to capture market share as the market transitions from unorganised to organised [5][41]. - The report notes that while Titan's long-term proposition is favorable, the current demand uncertainty warrants a Neutral rating [5][41].