Shares of Titan fell nearly 7.5 per cent on Monday to its day’s low of Rs 3,201 on BSE after the company on Friday reported a 1 per cent YoY decline in its standalone net profit to Rs 770 crore for the quarter ended June 30, 2024.
For the quarter ended June, Titan said its standalone net profit fell by 1 per cent to Rs 770 crore in the June quarter as compared to Rs 777 crore in the year-ago period as higher gold prices deterred demand.
However, the firm’s standalone revenue from operations rose 10 per cent to Rs 11,105 crore in Q1FY25 as compared to Rs 10,103 crore in Q1FY24.
What Should Investors Do Now?
Global brokerage firm Macquarie has retained its ‘Outperform’ recommendation on shares of Titan post its June quarter results, with a price target of Rs 4,100 on the stock. This is the third-highest price target for the stock on the street.
The brokerage said the first-quarter beat was led by stronger jewellery margin. The company sees an improvement in the operating environment due to customs duty adjustments.
Titan has retained its guidance of 11.5-12.5 per cent jewellery margin, despite expected reduction in discounting pressures.
Morgan Stanley has a ‘Equal-Weight’ rating on Titan, with a price target of Rs 3,620 per share. The brokerage cited that the company’s topline growth in Q1 was weak but known, while profitability was in-line with estimates.
Stability of gold prices remains a key monitorable. Higher competitive intensity is now a reality, though overall market share has been maintained.
Another brokerage Citi wrote in its note that the second-quarter growth may benefit from the import duty cut, given the elevated competitive intensity and gold price. Citi will watch out for the margin trajectory.
Citi remains ‘Neutral’ on Titan with a price target of Rs 3,510 per share.
Nuvama, in its note, said that Titan reported a slow start to the year in Q1 with lower growth of 9 per cent year-on-year in the jewellery business, primarily due to negligible wedding dates in the quarter that usually has a busy wedding calendar; this coupled with elections, had a negative impact on growth.
What stood out, as per the brokerage, was the resilience in margins, which improved year-on-year due to cost optimisation measures.
The next levers of growth would come from the scale-up of the international segment, Mia, along with CaratLane.
“By reducing customs duty on gold, the government has effectively dissuaded illegal imports while simultaneously invigorating consumer interest,” Nuvam said while upgrading Titan to ‘Buy’ from ‘Hold’ with a target of Rs 3,955.
The highest price target on Titan among the 31 analysts that have coverage on it is Rs 4,485 from Antique Stock Broking, which implies a potential upside of 35 per cent from the current market levels.
The stock has declined 7 per cent so far in 2024.
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