Titan Shares Drop 4.4% After Q2 Jewellery Growth Misses Estimates
Titan Company faces a significant stock decline as Q2 jewellery growth falls short of expectations, despite brokerages maintaining positive ratings.
Titan's stock fell 4.4% to Rs 4,350 after disappointing Q2 jewellery growth.
Brokerages like CLSA and JPMorgan maintain bullish ratings despite the miss.
Domestic jewellery business grew 21% YoY, but missed JPMorgan's estimate of 25%.
Titan Company experienced a notable decline in its stock price, dropping 4.4% to Rs 4,350 during early trading on Wednesday. This downturn followed the company's announcement that its jewellery growth for the July-September quarter did not meet several market expectations. Factors such as softer buyer growth and a shift in festive demand contributed to this shortfall, making Titan the biggest loser on the Nifty 50 index, which itself was down 0.7% at the time.
In the second quarter of FY27, Titan's domestic jewellery segment reported a year-on-year growth of 21%. While this figure surpassed the consensus estimate of 19.3% provided by CLSA, it fell short of JPMorgan's more ambitious forecast of 25%. Despite the disappointing results, CLSA has retained its 'Outperform' rating for Titan, setting a target price of Rs 5,590 per share, which suggests a potential upside of approximately 23% from the previous day's closing price.
JPMorgan, which also maintained an 'Overweight' rating with a target price of Rs 5,540, anticipated a negative market reaction due to the revenue miss. The brokerage pointed to muted buyer growth, decreased gold coin sales, and a delay in festive consumption as key factors influencing the stock's performance. Notably, jewellery demand remained robust in July and August, with growth exceeding 25%, before tapering off in September.
HSBC has also kept its 'Buy' rating on Titan, with a target price of Rs 5,510, noting that the second-quarter sales fell below expectations partly due to the timing of the festive season. The brokerage adjusted its jewellery revenue estimates downward by 1%. Despite the near-term challenges, Titan's underlying business trends remain strong, particularly in studded jewellery, which grew in the early 30s, outperforming plain jewellery growth of around 20%.
Looking ahead, analysts remain optimistic about Titan's future performance. CLSA noted that demand was generally healthy throughout most of the quarter, although some softening was observed as festive demand shifted into the next quarter. HSBC anticipates an improvement in Titan's product mix, driven by lower gold coin sales and a higher contribution from studded jewellery. Furthermore, Titan's acquisition of a 67% stake in Damas last year is showing early signs of recovery, which could positively impact the company's growth trajectory going forward.
