Titan share hits 18-month low; stock slides 17% in 1 month post Q3 earnings

Titan share price: Demand trends look encouraging as lower tax rates are likely to increase discretionary income in the coming quarters

Titan Company share price hit an 18-month low of Rs 3,031 on the BSE today, as it fell 2 per cent in Tuesday's intraday trade, on margin concerns. The stock of the jewellery company was trading at its lowest level since August 2023.

 

In the past one month, shares of Titan, the owner of 'Tanishq' brand, have underperformed the market with the stock plunging 17 per cent after it reported a lower-than-expected margin in December 2024 quarter (Q3FY25). In comparison, the BSE Sensex was down 7.2 per cent during the same period.  READ: Stock Market LIVE Updates

 

Titan is a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation (TIDCO).

 

 

Demand trends look encouraging as lower tax rates are likely to increase discretionary income in the coming quarters. While the January to March quarter (Q4FY25) has started on a good note, a sharp increase in gold prices and gold lease rates pose a challenge in the near term, according to analysts.

 

The Management, meanwhile, has maintained the standalone earnings before interest & tax (Ebit) guidance of ~11-11.5 per cent, but analysts believe higher competition intensity may pose a risk for the company in the short-term.

 

Titan's standalone reported Ebit margin contracted 203 basis points (bps) to 9.3 per cent in Q3FY25, from 11.3 per cent in the same quarter the previous year (Q3FY24). However, Ebit grew 1.9 per cent year-on-year (Y-o-Y) to Rs 1,506 crore from Rs 1,478 crore in Q3FY24.

 

Overall, Titan's standalone profit declined 4.9 per cent Y-o-Y at Rs 990 crore, compared to Rs 1,040 crore a year ago, while total income surged 24.2 per cent Y-o-Y to Rs 16,228 crore, up from Rs 13,071 crore in Q3FY24. The growth in revenue was driven by strong performances in the jewellery and eyecare segments.  READ: IRFC up 4% as centre elevates company's status to Navratna from Miniratna I

 

"The festive quarter brought consumer cheer with secondary sales recording an impressive 28 per cent growth. It was buoyed by higher gold prices, wedding-related purchases growing by 29 per cent and healthy same-store sales growth of 22 per cent compared to Q3FY24," the company had said in its earnings release.

 

The management also said that customs duty-related losses on the inventory (held at the time of the duty change) have been fully realised in this quarter. Hence, the profitability is lower to that extent.

 

Nonetheless, analysts at Centrum Broking remain upbeat on Titan's topline performance led by strong demand across business segments and its promising footing in the international market.  

 

"We reckon Titan’s strategy revolving around serving millennials, meeting their aspirational demand with introduction of new designs and channels, yet rising share of wedding jewelry could pay richly. The turnaround in the Caratlane, Watches and Wearables, and eyewear divisions and continuity in their profitability potential need to be watched," the brokerage firm had said in its Q3 result update.

 

Studded jewellery share dipped slightly to 23 per cent due to higher gold jewellery demand. 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, said analysts at Nuvama Institutional Equities.

 

Titan, with its superior competitive positioning (in sourcing, studded ratio, youth-centric focus, and reinvestment strategy), continues to outperform other branded players. The brand recall and business moat are not easily replicable; therefore, Tanishq’s competitive edge will remain strong in the category.

 

Notably, Titan's Ebitda margin will likely contract in FY25 owing to a lower studded mix. It will be critical to monitor the margin outlook amid intensifying competition. The non-jewelry business is also scaling up well and will contribute to growth in the medium term, according to Motilal Oswal Financial Services.