Brokers cut their target prices on Titan Company stock, which Rakesh Jhunjhunwala backed, after the jewelry major’s Q4 results didn’t meet forecasts.
Titan revealed a stand-alone net profit for the January–March quarter of Rs 786 crore, up 7% year over year. Nonetheless, a Moneycontrol survey predicted that the profit will increase to Rs 811 crore, or 10.5% year over year.
In a regulatory filing, the jewelry and watchmaker reported revenue of Rs 10,047 crore, up 17% year over year. Revenue was estimated by the brokerages at Rs 11,054 crore.
Titan’s total jewelry revenue reached approximately Rs 8,998 crore, up 19% from the same period the previous year. In particular, the Indian business expanded by 20% throughout this period.
Also read: More about Titan Q4 Results
The growth in domestic buyers was double digits YoY, average selling prices (ASP) increased by a single digit, and the proportion of new buyers in the jewelry market was approximately 54% throughout the quarter.
According to Goldman Sachs, the robust revenue growth is expected to continue, but the intense competition that lies ahead will limit the possibility for margin increase in FY25.
Titan’s Q4 PAT fell short of projections because to a larger subsidiary loss and a 70–100 bps jewelry margin shortfall. Although the topline growth for jewelry is a robust 20 percent, high competition and a higher gold mix in sales of studded jewelry are the reasons for the margin miss, according to Emkay Global.
Wearables and watches detect weakness
The watches industry had a poor quarter because of the intense competition that led to a high topline. The company’s revenue for the quarter was approximately 940 crores, an increase of 8% over the previous year.
Because of competitors’ excess inventory, the category is seeing pressure on prices. It will settle in three to four months, according to Titan. The company will keep its attention on top-line growth, and as scale increases, profits should follow.
UBS stated that substantial discounts and offers will have an effect on margins, and that the demand situation will remain weak.
Rising gold prices will affect demand in Q1 as per Titan Q4 results
Since the level of competition is rising in tandem with the price of gold, margins in the jewelry industry are probably going to stay low in the near future. With the ongoing elections, lower wedding dates, and rising gold prices, demand for the next quarter is probably going to be negatively impacted.
The high gold inflation impacting demand emotions, a common trend during inflationary times, appears to be dampening the near-term GDP forecast, according to Motilal Oswal.
According to the brokerage, Titan maintains an aggressive growth outlook, powered by market share increases, attractive designs, and the addition of new stores, despite the short-term jitters. Titan added that it will keep running promotions to encourage rapid expansion and client acquisition.
Is it best to buy, sell, or hold?
International brokerage Jefferies maintained its “hold” recommendation on the player, predicting a weakening in trading on May 6. The stock is probably going to remain range-bound in the short run. Experts believe it’s better to “hold” the share price for now.
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