Titan's Q4 Review: Brokerages Cut Targets, Gold Prices Impact Demand

The jeweller and watchmaker's revenue came in at ₹10,047 crore, rising 17% on-year, the company said in a regulatory filing. The brokerages pegged revenue at ₹11,054 crore.

Titan's total income from the jewellery increased by 19% compared to the same period last year, reaching around ₹8,998 crore. The Indian business specifically grew by 20% during this time. Domestic buyer growth came in healthy double-digits YoY, average selling prices (ASP) saw single-digit rise and new buyer contribution was 54% of jewellery customers for the quarter.

Goldman Sachs said that the strong revenue growth sustained, but the competitive intensity ahead will cap its margin expansion potential for FY25.

Titan’s Q4 PAT missed estimates due to 70-100 bps jewellery margin miss and higher subsidiary loss. Whereas jewellery topline growth is healthy at 20%, the margin miss is a factor of high competition and higher gold mix in studded sales, said Emkay Global.

The watches segment had a weak quarter, as the topline was high due to high competition. The business achieved a total income of around ₹940 crores in the quarter, marking an 8% rise year-on-year. The category is seeing pricing pressure due to excess inventory with competitors. Titan expects the froth to settle in 3-4 months. The firm will continue to focus on top-line growth, and margins are expected to follow, with increase in scale.

However, UBS said the demand environment will remain weak, with margins to be impacted by high discounts and offers.

Margins are likely to remain soft in the jewellery segment in the near term as the competitive intensity is increasing along with rising gold prices. Demand for the upcoming quarter is likely to be hit by the jump in gold prices, leading to dampening consumer sentiments, the ongoing elections and lesser wedding dates.

“The near-term growth outlook appears subdued due to high gold inflation affecting demand sentiments, which is a typical trend during inflationary periods,” said Motilal Oswal.

Despite the near-term jitteriness, Titan remains aggressive in its growth outlook, driven by new store additions, attractive designs, and market share gains, added the brokerage. Titan also said it shall continue with promotions to drive aggressive growth and customer acquisitions.

So, should you buy, sell, hold? International brokerage Jefferies retained its ‘hold’ call on the player, and said the share price is likely to see weakness in trade on May 6. In the near-term, the stock is likely to stay range-bound.

Nuvama Institutional Equities downgraded Titan to 'hold', slashing its target price to ₹3,867 from ₹4,106 apiece. Emkay Global also reduced its target price on Titan, cutting it by around 4.6% to ₹4,150 per share.