Nuvama downgrades Titan, cuts target price to Rs 3,867 post Q4 results

Brokerage firm Nuvama downgraded the shares of Titan to ‘hold’ with a revised target price of Rs 3,867 from an earlier Rs 4,106 given the fact that the weakness in margins is likely to persist in the near term post Q4 results.

The downgrade came after the company reported a 9% miss in consensus earnings driven by weaker jewellery margins for two consecutive quarters. The margin miss was attributed to higher competitive intensity given gold price spike and marketing investments to drive aggressive growth and customer acquisitions.

Nuvama estimated that the soreness in margins is likely to continue in the near future, especially in H1FY25. The firm cut down its FY25/26 PAT by 6%.

Titan had reported high double-digit revenue growth for the quarter ended March 2024 on the back of a solid show by jewellery and emerging businesses.

Titan’s revenue jumped 17% YoY in the fourth quarter and 86 stores were added in the same period. The overall store count currently stands at 3,035.The company expects margins to stay soft in the jewellery segment in the near term as the competitive intensity is increasing along with rising gold prices. The company would continue with promotions to drive aggressive growth and customer acquisitions. EBIT margin expectations for the jewellery segment, as per management, is at 12–13%Management also indicated that given the current scenario of rising gold prices and competitive intensity, the marketing investments would stay higher, which would affect margins.The share price Titan closed at Rs 3,535.40 on Friday on BSE.

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