Titan gets a downgrade as street turns cautious post Q1 business update

    Brokerage firm JPMorgan downgraded Titan Co. Ltd. to “neutral” from its earlier rating of “overweight,” after the company’s June quarter business updated reported last Friday.

    The brokerage also cut its price target to ₹3,450 from ₹3,850 earlier.

    After eight quarters of being in-line or better than expectations, Titan’s jewellery business revenue growth of 9% in the June quarter was below already lowered expectations, according to JPMorgan.

    Titan highlighted in its business updated that high gold prices, low wedding days, which resulted in subdued consumer demand, thereby impacting growth overall.

    JPMorgan noted that while there is a short-term demand impact from the high gold price volatility, they remain more concerned about the moderating growth for studded jewellery, amidst an increasing consumer preference for gold and the intensifying promotional activity, which may deter the pace of new customer acquisition for Titan.

    Both the above highlighted factors, if sustained for long, could also impact Titan’s margin profile going forward, JPMorgan wrote in its note.

    Therefore, JPMorgan lowered Titan’s financial year 2025-2027 Earnings Per Share (EPS) estimate by 5% to 6%.

    Goldman Sachs also called Titan’s quarterly update “disappointing” but maintained its “buy” recommendation on the stock with a price target of ₹3,700. It mentioned that competition did better than Titan during the quarter, which is a cause of concern, adding that its Jewellery margins are also likely to be under pressure.

    While Goldman does believe that Titan can still achieve its guidance for financial year 2025, it is likely to be at the lower end of the range.

    Titan’s jewellery margins likely to be under pressure is a sentiment echoed by Morgan Stanley as well. The brokerage has an “Equalweight” rating on the stock with a price target of ₹3,526.

    CLSA though, maintained its “outperform” rating on Titan with a price target of ₹4,045. It said that any correction, as a result of a “rare soft result” should be seen as an opportunity to “accumulate” as it expects growth to return as gold prices normalise and wedding season arrives again.

    Out of the 31 analysts that have coverage on “Titan”, 16 of them maintained their “buy” recommendation on the stock, 10 said “hold”, while five of them had a “sell” rating.

    Shares of Titan ended 1.9% on Friday at ₹3,272.5. The stock is down 11% so far in 2024.

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