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Titan, a Tata Group company, experienced a decline in share price exceeding 2% during early Monday trading following a less-than-anticipated growth in its jewellery business during the first quarter of fiscal year 2025 (FY25).
This news led to a significant drop in Titan shares, plummeting as much as 3.46% to ₹3,156.15 apiece on the Bombay Stock Exchange (BSE), marking the fifth consecutive trading session of decline.
The company disclosed in its quarterly business update on July 5th that Titan Company achieved a year-on-year (YoY) growth of 9% in Q1FY25. However, its domestic jewellery operations registered a modest 8% YoY growth, attributed to a dip in consumer demand stemming from the surge in gold prices and a lower number of wedding days.
The company elaborated that the domestic growth was primarily driven by an increase in average selling prices, while buyer growth remained in the low single digits.
Beyond jewellery, Titan's Watches & Wearables segment witnessed a domestic growth of 14% YoY, with analog revenue surging by a healthy 17% YoY. However, wearables experienced a 6% YoY decline.
The EyeCare division's domestic business recorded a 3% YoY growth, with the division's foray into affordable fashion contributing to volume growth for the category.
During the June 2024 quarter, Titan Company added a net total of 61 stores, expanding its combined retail network presence to 3,096 stores.
Titan's Q1FY25 performance fell short of Antique Stock Broking's expectations due to the weakness in the jewellery business.
Caratlane, a subsidiary of Titan, continued to perform well, achieving a strong 18% YoY growth. However, Emerging businesses experienced a moderation in growth, with revenue increasing by only 4%. Taneira and Fragrances & Fashion Accessories also saw a 4% YoY growth.
Despite the recent downturn, Antique Stock Broking maintains optimism regarding Titan Company's long-term prospects, citing its ability to gain market share across various geographies, including the South, due to strong execution and brand recognition.
The brokerage expects Titan to deliver sales and earnings compound annual growth rates (CAGRs) of 21% and 28%, respectively, over FY24–27E.
Maintaining its 'Buy' recommendation on Titan shares, Antique Stock Broking has set a target price of ₹4,490 per share.
On Friday, Titan shares closed nearly 2% lower after Kotak Institutional Equities downgraded the stock from 'Add' to 'Reduce', simultaneously lowering the target price from ₹3,600 to ₹3,075 per share.
This move was attributed to multiple margin headwinds and an unfavorable risk-reward scenario, as cited by Kotak Institutional Equities.
The brokerage firm revised its FY 2025-2027 EPS (earnings per share) estimates for Titan by 5-6% to account for external headwinds such as heightened competitive intensity, potentially exacerbated by the launch of Aditya Birla Group's Novel Jewels. Additionally, the brokerage anticipates direct and indirect impacts of loan-to-value (LTV) ratios on Tanishq's studded growth and profitability.
Despite acknowledging Titan's effective execution, Kotak Equities expressed its view that the risk-reward balance is unfavorable amidst these headwinds and high expectations.
Over the past month, Titan share price has declined by over 8%, while the three-month decline stands at 16%. On a year-to-date (YTD) basis, the stock is down over 14%.
At 9:20 am, Titan shares were trading 3.38% lower at ₹3,158.70 apiece on the BSE.
Source: Titan share price falls over 3% as Q1 jewellery business growth disappoints