Titan’s share price has fallen more than 7% after Q4 results; These are the things whether you should buy, sell, or hold this stock.

 

Titan share price May 6 

Titan shares have outperformed equity benchmark Sensex in the last year. Titan share price has risen almost 29 per cent in a year while the Sensex has risen almost 21 per cent.

Titan share price touched a 52-week high of ₹3,885 on January 30 on the BSE. Its 52-week low is ₹2,666.55, which it touched on May 5 last year. For the current calendar year, as of May 3 close, the Titan share price is down about 4 percent. AFP PHOTO/Ralphson DAVID (AFP)

On Monday, May 6, shares of Titan Company fell over 7 per cent in morning trade on the BSE, after its March quarter results came in below expectations. Titan share price opened at ₹3,481.10 against the previous close of ₹3,535.40 and fell over 7 per cent at ₹3,287. At around 10:15 am, Titan share price was down 5.75 per cent at ₹3,332 per share. At this time, equity benchmark Sensex was up 0.30 per cent at 74,096.

After market hours on Friday, May 3, Titan reported 5 percent year-on-year growth in consolidated investor withdrawals for the quarter ending March 31, 2024. Total income for the quarter grew 22 percent year-on-year and stood at ₹11,472 crore.

The company’s EBIT for the quarter grew 10 per cent year-on-year to around ₹1,192 crore.

Total quarterly income of the Jewelery segment stood at around ₹8,998 crore YoY, while total income of ‘Watches & Wearables’ stood at ₹940 crore for the quarter, growing by 8 per cent YoY.

Shares of Titan have surged nearly 29 percent in the last year, outperforming equity benchmark Sensex, which has gained nearly 21 percent in the same period.

Share price of Titan Company touched a 52-week high of ₹3,885 on BSE on January 30 this year. Its 52-week low is ₹2,666.55, which it touched on May 5 last year. For the current calendar year, as of May 3 close, the Titan share price is down about 4 percent.

Buy, Sell, or Hold Shares – Top brokerage firms have maintained their previous recommendation on Titan stock, but some have lowered their estimates due to gold inflation and cutting the fair value of the stock. Let’s see what some people say:

Motilal maintains buy recommendation on Titan shares and keeps the target price at Rs 4,100. It said Titan remains its flagship consumer financial play in India. However, the brokerage firm has reduced its earnings per share (EPS) estimates by 6 per cent and 5 per cent for FY25E and FY26E, respectively.

The brokerage firm believes that Titan’s near-term growth outlook looks murky due to high gold inflation impacting demand sentiments. This is, however, a general trend during periods of inflation.

“Despite the close headwinds, the company remains bullish on its growth outlook through new store additions, attractive designs, and market share growth. Titan also maintains jewelery EBIT margins at 12-13 per cent for FY25. We Will monitor computation trends closely,” Motilal said.

Motilal stressed that Titan is meeting its prior FY22 revenue guidance of 2.5x by FY27, which implies an impressive 20 per cent CAGR over the period.The brokerage firm believes that with the current market share at a significant market of around ₹5 lakh crore, there is plenty of room for growth for Titan.

Kotak has an add recommendation on Titan stock with a revised fair value of ₹3,750 to ₹3,600. It has cut FY25/26E consolidated jewelery EBIT margin estimate by 90-110 bps and IPS estimate by 5-8 per cent.

“We increase jewelry sales by 2 per cent over FY25-26E and reduce jewelry EBIT margins by 90-110 bps; net result: 5-8 per cent EPS cut. We see consolidated jewelry growth of 17 per cent during FY2024-27E “We estimate a sales CAGR of Rs. 1,000 crore, which includes (1) 15 percent domestic CAGR at stores CAGR of about 9 percent, (2) 70 percent CAGR in international business and (3) 30 percent CAGR in Caratlane,” Kotak said.

“We value Titan at 60x June 2026E PE (earnings ratio). The share price is poised for saturation; we also see the use of lab-grown diamonds in India (and Titan’s pearl stakes) and Aditya Birla Group’s upcoming Will keep an eye on the jewelery sector,” Kotak added

JM Financial called buy on the stock but cut the target price to ₹3,825 from ₹3,940, saying Titan’s March quarter earnings were below expectations.

“Revenue was in line, but there was an overall miss of about 3 percent on segment profits as food freshness was low and other segments lacked operating leverage. The performance of the watches and aviaries segment has been volatile, and before reaching steady state More work is required,” JM Financial said.

The brokerage firm believes that gold price volatility, elections and fewer wedding dates could impact growth and margins in the near future.

However, JM Financial also highlighted that for the full year, Titan will aim to maintain the growth momentum of its jewelery division and it reassessed its 12-13 per cent margin guidance.

Titan stock may face negative reaction due to weak Q4 results and near-term demand problems. From a long-term perspective, the upside remains for growth, considering the large opportunity size and Titan’s excellent execution capabilities,” JM Financial said.