Titan Company Ltd, Rekha Jhunjhunwala's biggest stock bet, saw margin pressure across segments, as suggested by December quarter results, indicating a tad softness in demand and intensifying competition. There was a 11 per cent miss in consensus earnings, led by weaker margin in Jewellery segment -- 12.2 per cent against estimate of 13 per cent, and Watches & Wearables -- 5.6 per cent against estimate of 13 per cent. Analysts target on the Titan ranged Rs 3,600-4,100 limited upside ahead for the Jhunjhunwala's favourite stock.
The 5.37 per cent stake that Rekha Jhunjhunwala held at the end of December quarter in this Tata group firm was worth over Rs 17,200 crore at Friday's closing price of Rs 3,613.05.
Prabhudas Lilladher said Titan's Q3 profit missed its estimates, led by 200 basis points lower share of studded jewellery, muted demand in the December quarter amid high gold prices and higher competition from smaller, unorganised players. Watch margins suffered due to higher investments on wearables/Fastrack and higher sales of margin dilutive online channel, it said.
"Titan is a formidable play on emerging lifestyle segments which will gain from rising discretionary spends. Titan trades at 58.4 times FY26E EPS with 23 per cent EPS CAGR over FY24-26. We assign DCF based target price of Rs3627 (Rs 3,640 earlier). We recommend Accumulate Titan on declines for long-term gains," PL siad.
Kotak Institutional Equities said the overall top line growth for Titan was robust, but the margin print and studded share were a tad weak. It tweaked its estimates and revise is fair value on the stock to Rs 3,750 from Rs 3,775 earlier, implying 60 times FY2026E PE.
Nuvama said the Jewellery margin miss was due to lower studded ratio (24 per cent against 26 per cent YoY); higher competitive intensity given gold price spike; and marketing investments.
"There was no major impact of diamond prices on margins. While there is a divergence in performance across Titan’s segments, it highlighted that January Jewellery demand stayed strong. We adjust FY24 PAT lower by 4 per cent and rolling over to FY26 yields a target of Rs 4,106 (65x PE plus Caratlane at 4x sales, Rs 3,795 earlier). See risks to earnings mainly from jewellery margin trends. Retain ‘BUY’," Nuvama said.
Centrum Broking said it remained upbeat on Titan’s operating performance led by strong demand across businesses segments yet its footing in international market appears to be promising.
"We reckon Titan’s strategy revolving around serving millennials, meeting their aspirational demand with introduction of new designs and channels, yet rising share of wedding jewellery could pay richly. Further with rising interest rates and industry formalization showing up in market share gains for Titan," it said.