Titan shares fall over 7% as Q4 numbers missed estimate: Here's what brokerages say
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Following Titan Company's announcement of weaker-than-expected March quarter results, its stock plummeted by over 7%. The share price declined by 7.57% to hit an intra-day low of Rs 3,285 per share on the NSE.
In early trading session on Monday, Titan Company's stock plunged by over 7%, following the company reported weaker-than-expected March quarter results. Shares of Titan Company dropped by 7.57% to reach intra day low of Rs 3,285 apiece on the NSE.
After market hours on Friday, May 3, Titan reported a 5% year-on-year (YoY) increase in consolidated net profit, reaching Rs 771 crore for the quarter ending on March 31, 2024. Total income for the quarter also surged by 22% YoY to Rs 11,472 crore.
The company's EBIT for the quarter experienced a 10% year-on-year (YoY) growth, reaching nearly Rs 1,192 crore. In the Jewellery segment, total quarterly income grew by 19% YoY, amounting to nearly Rs 8,998 crore, while the 'Watches & Wearables' segment saw its total income for the quarter stand at Rs 940 crore, marking an 8% YoY increase.
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Brokerages on Titan Company
Kotak Institutional Equities on Titan Company
Kotak has revised its outlook on Titan stock, adjusting the target price from Rs 3,750 to Rs 3,600. This alteration follows a reduction in the FY25/26E consolidated jewelry EBIT margin estimate by 90-110 basis points (bps) and a corresponding decrease in EPS estimates by 5-8%.
"We've raised FY25-26E jewellery sales growth by 2% while lowering jewellery EBIT margin by 90-110 bps, resulting in a 5-8 percent EPS cut. We project a 17% consolidated jewelry sales CAGR over FY2024-27E," stated Kotak.
The valuation of Titan by Kotak is based on a 60 times June 2026E PE ratio. However, Kotak warns that the stock is currently priced for perfection, emphasizing the importance of monitoring the adoption of lab-grown diamonds in India and Aditya Birla Group's upcoming jewelry venture.
Motilal Oswal on Titan Company
Motilal Oswal Financial Services maintained a buy call on Titan stock, setting a target price of Rs 4,100. The firm emphasized Titan's position as its top consumer discretionary play in India. However, it revised its earnings per share (EPS) estimates downward by 6% and 5% for FY25E and FY26E, respectively.
Motilal Oswal cited a subdued near-term growth outlook for Titan, attributed to high gold inflation impacting demand sentiments—a trend common during inflationary periods. Despite this, the company remains aggressive in its growth strategy, focusing on new store additions, attractive designs, and market share gains.
Maintaining a Jewelry EBIT margin projection of 12-13% for FY25, Motilal Oswal highlighted Titan's commitment to achieving its existing jewelry revenue guidance of 2.5 times FY22 revenue by FY27, implying a noteworthy 20% compound annual growth rate (CAGR) during the period.
With Titan currently holding a market share of nearly 8% in a substantial nearly Rs 5 lakh crore market, Motilal Oswal sees significant growth potential for the company.
JM Financial on Titan Company
JM Financial maintained its buy recommendation on Titan Company's stock but revised its target price downward to Rs 3,825 from Rs 3,940, attributing the adjustment to Titan's March-quarter earnings falling below expectations.
According to JM Financial, while revenue was in line with expectations, lower margins across segments, particularly a weaker gross margin in jewelry and a lack of operating leverage in other segments, resulted in an overall nearly 3% miss on segment profits. The brokerage firm noted that the performance of the watches and eyewear segments has been volatile, requiring further attention before stabilizing.
JM Financial cautioned that near-term growth and margins may be affected by factors such as volatility in gold prices, electoral events, and fewer wedding dates. However, it emphasized that Titan remains committed to maintaining momentum in its jewelry division growth for the full year, reiterating its margin guidance of 12-13%.
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