Titan share price targets: Q2 sales miss drags stock 4%; why Jhunjhunwala stock remains a buy - BusinessToday

Shares of Titan Company Ltd, a Tata group firm, fell 5 per cent in Wednesday's trade after the Rekha Jhunjhunwala's largest equity bet reported jewellery sales growth of 21 per cent year-on-year (YoY), which was below analyst forecast of around 25-27 per cent. Despite this brokerages inckuding UBS, Goldman Sachs, Citi, HSBC and Macquarie retained their 'Buy' on the stock, with the 12-month consensus target now standing at Rs 5,423, implying 22.7 per cent potential upside.

Nomura India said Titan will be cycling a high jewellery sales growth base of 40 per cent, 45 per cent and 38 per cent in December, March and June quarters. It said the benefits of high gold prices could fade if gold prices remain at these levels, indicating that revenue growth may see optical moderation on a sequential basis from the December quarter onwards.

"However, despite the optical near-term headwinds, we expect Titan to report strong consolidated FY27F sales/EBIT growth of 19 per cent/23 per cent and maintain its guidance of consolidated jewellery sales/EBIT CAGR of 19 per cent/18 per cent over FY26-30E, indicating higher visibility of strong growth. Hence, any optical moderation in sales growth due to a high base and resulting correction in stock price, if any, could be an opportunity for investors to accumulate the shares," Nomura said.

Nomura said Titan is its top sector pick. It suggested 'Buy' rating and a target of Rs 5,425. The stock fell 4.52 per cent to hit a low of Rs 4,334.90 apiece on BSE.

The Tata group stock is Rekha Jhunjhunwala's biggest stock holding in value terms. At the end of June quarter, Jhunjhunwala held 5.31 per cent stake in the company, which was valued at over Rs 20,000 crore.

Citi had estimated domestic jewellery sales growth of 27 per cent, given gold prices were up 46 per cent for the quarter. The miss, it said, primarily reflected festive shift to the December quarter and weaker investment-led coin demand, rather than underlying demand slowdown. It suggested a target of Rs 5,700.

HSBC said Titan's product mix is expected to be better given lower gold coin sales and higher studded share. It suggested a target of Rs 5,510. Morgan Stanley retained its 'overweight' and suggested a target of 5,483. Its analyst Archana Menon said any near-term correction would be a good entry opportunity.

Titan added 78 net new stores during the quarter, expanding its combined retail network to 3,758 stores. Its jewellery portfolio grew 21 per cent YoY for the quarter. CaratLane delivered 32 per cent revenue growth against MOFSL estimate of 28 per cent growth, but lower than 40 per cent growth in Q1. Watches recorded 30 per cent YoY growth against a forecast of 10 per cent growth, while Eyecare delivered 28 per cent YoY growth against MOFSL estimate of 15 per cent. For now, MOFSL has 'Buy' and a target of Rs 6,000 on the stock.

SBI Securities said Titan's was a decent performance across divisions, led by watches and eyecare recovery, despite festive calendar shift in jewellery. It sees it as positive for the stock in short term.