Weak margin in Q3 show drags Titan share price 4%; analysts weigh in

Titan share price: Watch and eyewear brand Titan share price took a hit on Wednesday, February 5, 2025, falling as much as 3.53 per cent to an intraday low of Rs 3,472.05 per share despite reporting a decent overall performance for Q3FY25. 

 

The primary concern weighing on the Titan share was weaker-than-expected margin in Q3 results, analysts said. 

 

Domestic brokerage InCred Equities cited weaker-than-expected margin in Q3 in its ‘First Cut’ note. The brokerage, however, maintained an ‘Add’ rating with a target price of Rs 3,840. 

 

Those at Motilal Oswal, too, noted while revenue growth was strong, margins were impacted by a lower studded share and a contraction in gross margin. Therefore, they maintained a ‘Buy’ rating with a target price of Rs 3,588. 

 

 

Titan’s Ebitda margin contracted 170 basis points (bps) to 9.4 per cent in Q3FY25, from 11.1 per cent in the same quarter the previous year (Q3FY24). However, Ebitda grew 7 per cent year-on-year (Y-o-Y) to Rs 1,674 crore, from Rs 1,565 crore in Q3FY24. 

 

Among other brokerages, JM Financial retained a ‘Hold’ rating, highlighting strong jewellery demand but noting margin pressure. 

 

Global brokerages, meanwhile, remained positive on Titan. Goldman Sachs reportedly maintained a ‘Buy’ rating with a target price of Rs 3,900. Macquarie kept an ‘Outperform’ rating, with a target price of Rs 4,150. Similarly, Morgan Stanley maintained an ‘Overweight’ rating on the company, with a target price of Rs 3,876.

 

Overall, Titan’s profit remained nearly flat, at Rs 1,047 crore, compared to Rs 1,053 crore a year ago, while revenue surged 25.2 per cent Y-o-Y to Rs 17,740 crore, up from Rs 14,164 crore in Q3FY24. The growth in revenue was driven by strong performances in the jewellery and eyecare segments.

 

Titan Q3 results (segment-wise)

 

The jewellery division posted a strong total income of Rs 14,697 crore, growing 26 per cent over Q3FY24. The India business itself grew 25 per cent during the same period. The festive quarter boosted consumer demand, with secondary sales growing 28 per cent, wedding-related purchases up by 29 per cent, and same-store sales growing by 22 per cent. Gold jewellery and coins continued to perform well, with a 27 per cent growth compared to the previous year. The Ebit margin for the jewellery division stood at 9.5 per cent, and after normalising for the impact of custom duties, the margin improved to 11.2 per cent. During the quarter, the company expanded its presence by opening 11 new Tanishq stores and 13 Mia stores in the domestic market.

 

The watches and wearables division recorded a total income of Rs 1,128 crore, reflecting a 15 per cent increase over Q3FY24. The domestic business grew 14 per cent during the same period, with the analog segment seeing a robust 20 per cent growth. Titan brand itself recorded an 18 per cent increase, while international brands saw a 30 per cent growth in retail sales. 

 

However, the wearables segment saw a 20 per cent decline, with both average selling prices and volumes decreasing 8 per cent and 7 per cent, respectively. Ebit for the division was Rs 111 crore, with a margin of 9.8 per cent. The company added 23 new stores, including 12 Titan World stores, 10 Helios stores, and 1 Fastrack store.

 

Eyecare showed promising growth, with total income rising 16 per cent Y-o-Y to Rs 194 crore. International brand sales grew 56 per cent, while sunglasses sales outpaced other product categories, growing 35 per cent. Frames and lenses also posted solid growth in the mid-double digits. The division recorded an Ebit of Rs 21 crore, with a margin of 10.8 per cent. During the quarter, Titan Eye+ opened 3 new stores.

 

On the international front, Titan's jewellery business in North America grew 64 per cent, fuelled by new store openings and solid regional demand. The international presence of Tanishq expanded with two new stores in Dubai and Seattle, bringing the global count to 20 stores (18 Tanishq and 2 Mia). Titan Eye+ also made strides with four international locations.

 

The festive quarter firmly established a strong growth trajectory for FY25, after a subdued Q1 and healthy Q2. C K Venkataraman, managing director of Titan, noted that the quarter saw the strongest jewellery performance yet for the fiscal year, with retail growth in gold, watches, and eyewear. Despite the profitability being impacted by customs duties, the company is focused on scaling its businesses, especially emerging ones, and remains optimistic for a strong finish to FY25.