On July 8, shares of Titan Company fell nearly 4% after JPMorgan downgraded the stock to ‘neutral’ from ‘overweight’ following the Tata group’s June quarter business update. JPMorgan also reduced its target price for Titan Shares to Rs 3,450 from Rs 3,850.
Titan’s jewellery business reported a 9% revenue growth in the June quarter, which did not meet the already lowered expectations. This marks the first miss after eight consecutive quarters of meeting or exceeding expectations. High gold prices and fewer wedding days resulted in subdued consumer demand, affecting overall growth, according to Titan.
JPMorgan analysts highlighted concerns about the short-term demand impact due to high gold price volatility and the moderating growth for studded jewellery. They noted an increasing consumer preference for gold and intensifying promotional activities, which could hinder new customer acquisition for Titan. If these issues persist, Titan’s margin profile could be negatively impacted, leading to a 5-6% reduction in Titan’s Earnings Per Share (EPS) estimate for FY25-27.
CLSA maintained its “outperform” rating on Titan with a price target of Rs 4,045, viewing any price correction as an opportunity to accumulate shares, expecting growth to return when gold prices stabilize and wedding season resumes.
Goldman Sachs described Titan’s quarterly update as “disappointing” but maintained a “buy” recommendation with a target price of Rs 3,700. They noted that competitors performed better during the quarter, and jewellery margins are likely to be under pressure. Despite this, Goldman Sachs believes Titan can still achieve its FY25 guidance, albeit at the lower end of the range.
Morgan Stanley echoed these concerns about jewellery margins and maintained an equal-weight rating with a price target of Rs 3,526.
At 10 am, Titan shares were trading 4% lower at Rs 3,133.00 on the National Stock Exchange (NSE). The stock has fallen 14% in 2024, underperforming the benchmark Nifty 50, which has risen around 11% during the same period.
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