Titan Shares Drop Over 3% as Q1 Jewelry Business Growth Disappoints Investors

The Tata Group's Titan Company reported lackluster growth in its jewelry business for Q1FY25, leading to a 3.46% decline in its share price to ₹3,156.15 per share on the BSE. The disappointing performance was influenced by fewer wedding days and rising gold prices, impacting consumer demand.

Titan's Q1FY25 Sees 9% YoY Growth, Jewelry Sales Impacted by Fewer Weddings and Higher Gold Prices

In its quarterly business update on July 5, Titan Company reported a 9% year-over-year (YoY) increase in Q1FY25. Its domestic jewelry operations experienced an 8% year-over-year increase, influenced by a decrease in the number of wedding days and a rise in gold prices, which reduced consumer demand.

The company stated that most domestic growth was attributed to an increase in average selling prices, while consumer growth was in the low single digits.

The domestic business in the Watches & Wearables segment experienced a 14% year-over-year growth rate, with a substantial 17% year-over-year revenue increase in analog. Wearables experienced a 6% year-over-year decrease.

EyeCare's domestic business experienced a 3% year-over-year increase, and the division's expansion into affordable fashion contributes to the category's volume growth.

Titan Company added 61 stores (net) during the June 2024 quarter, bringing its combined retail network presence to 3,096 stores.

Titan's Q1FY25 quarter performance was below Antique Stock Broking's expectations due to the weakness of the jewelry business.

Caratlane Revenue Rises 18% YoY; Brokerages Mixed on Titan's Long-Term Outlook Amid Market Headwinds

In the Mint report, Caratlane's revenue increased by 18% year over year while Emerging businesses experienced a moderate increase of 4% year over year. Taneira and Fragrances & Fashion Accessories also experienced a 4% year-over-year revenue increase.

Antiquity Broking's stock maintains a positive outlook on Titan Company in the long term. Through its strong brand and execution, Titan has the potential to expand its market share across various regions (including the South). It anticipates that Titan will generate a compound annual growth rate (CAGR) of 21% and 28% for sales and earnings, respectively, during the fiscal years of 2024–27.

The brokerage firm maintained its "Buy" recommendation on Titan shares, with a target price of ₹4,490 per share.

Kotak Institutional Equities downgraded Titan shares to “Reduce” from “Add” and reduced the target price to ₹3,075 per share from ₹3,600 earlier on Friday. The company cited numerous margin headwinds and unfavorable risk-reward. Titan shares ended the day nearly 2% lower.

The brokerage reduced Titan's FY 2025-2027 EPS (earnings per share) estimates by 5-6% in response to external headwinds, including the competitive intensity that is expected to intensify with the launch of Aditya Birla Group's Novel Jewels and the direct/indirect impact of LGDs on Tanishq's studded growth and profitability.

“We admire Titan’s execution, but the risk-reward is unfavorable amid these headwinds and high expectations,” Kotak Equities said in a note.

Titan's share price has declined by more than 8% in a month and by 16% over three months. The stock has experienced a decline of more than 14% year-to-date (YTD).

On the BSE, Titan shares were trading at ₹3,158.70 each, representing a 3.38% decrease.

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