The share price of Titan is trading 1.48% lower today, February 6, at Rs 3,438.80. This comes after the company reported a 0.56% YoY decline in net profit, which stood at Rs 1,047 crore for Q3FY25.
Despite this dip, most brokerage firms continue to maintain a positive outlook on the stock, with expectations of margin growth and steady demand in the jewellery segment.
Let’s take a closer look at what brokerages are saying:
Nuvama: Maintains Buy, revises target price to Rs 4,115
The brokerage firm Nuvama has maintained a ‘BUY’ rating on Titan. It has also maintained an 18% upside potential. Furthermore, the brokerage firm has revised Titan’s target price to Rs 4,115, down slightly from Rs 4,182.
According to the brokerage house, Titan’s strong Q3FY25 performance, driven by wedding season demand, is a key factor in this optimistic outlook.
“Secondary sales grew 28% YoY, with wedding-related purchases increasing by 29% YoY, and gold prices rising sharply,” the brokerage firm noted.
The brokerage further highlighted in its report that despite a high base effect from the previous year, Titan has managed to maintain its growth trajectory.
“Rising gold prices, product mix, and competition are affecting margins, though the slight sequential decline in core-jewellery EBIT margins on a sharp fall in studded ratio is encouraging,” added the firm.
Apart from this, the brokerage firm also noted some key risks that investors need to keep in mind. The most pressing risk comes from the volatility in gold prices, which has a significant bearing on demand. It noted that the steep rise in gold prices could dampen demand and lead to a drop in margins.
“The jewellery business is highly seasonal, with demand peaking during the wedding season and festivals. Any changes in the timing or volume of weddings could impact Titan’s revenue during certain periods,” according to brokerage.
Regulatory hurdles, such as changes in customs duty and government actions to curb gold demand, also pose a potential threat to the jewellery division.
Motilal Oswal: Bullish on Titan’s growth with Rs 4,000 target price
Motilal Oswal remains bullish on Titan, maintaining a BUY rating with a target price of Rs 4,000. The brokerage firm believes Titan is well-positioned to continue its growth trajectory, driven by its competitive advantages in the jewellery industry,
“Titan’s continued dominance in the jewellery sector can be attributed to its strong festive demand and rising gold prices,” added the brokerage.
In Q3FY25, Titan added 46 jewellery stores, bringing the total store count to 1,055, a 17% YoY growth. According to the brokerage, this expansion is in line with the expectations, with the company’s focus on increasing its footprint
“We believe Titan will continue to leverage its expanding store network, strong design capabilities, and superior customer understanding to maintain its leadership in the jewellery sector,” said the brokerage in its report.
Titan’s EBIT margin for standalone jewellery contracted by 100bps YoY to 11.2%, mainly due to a higher mix of gold amid rising gold prices.
“We remain confident in Titan’s ability to navigate through margin pressures, especially given its strong brand recall and business moat, which are difficult for competitors to replicate,” according to the brokerage.
Looking ahead, Motilal Oswal models a CAGR of 17% in revenue, 19% in EBITDA, and 22% in PAT for Titan from FY25 to FY27.
“Titan’s ability to outperform competitors, backed by superior sourcing strategies, youth-centric designs, and an aggressive reinvestment strategy, sets it apart in the branded jewelry segment,” added the brokerage.
Titan Q3FY25 performance
Titan’s net profit for Q3 FY25 dropped by 0.6% to Rs 1,047 crore, compared to Rs 1,053 crore in the same quarter last year.
However, the company’s sales grew by 25.68%, reaching Rs 17,550 crore, up from Rs 13,963 crore in Q3 FY24. The growth was mainly driven by a 25% increase in jewellery sales, which amounted to Rs 14,700 crore.
Titan stock performance
As of now, Titan Company is trading at a slight decline of 0.46%, over the past five days.
However, in the last six months, its stock has gained a 3.06% increase. On the other hand, over the past year, the stock has dropped by 3.42%.