Despite slowing topline growth as a result of surging gold prices, brokerages maintained their bullish outlook on Rakesh Jhunjhunwala's biggest bet Titan Company.
For the quarter ended June, Titan said its standalone net profit fell by 1 percent to Rs 770 crore in the June quarter as compared to Rs 777 crore in the year-ago period as higher gold prices deterred demand.
However, the firm's standalone revenue from operations rose 10 percent to Rs 11,105 crore in Q1FY25 as compared to Rs 10,103 crore in Q1FY24.
Also Read | Titan Q1 results: Standalone PAT falls marginally to Rs 770 crore
The slower-than-expected topline growth is a result of the sudden spike in gold prices and low-wedding days. The jewellery major addressed concerns on market share loss by attributing its relatively-weaker Q1 growth to a higher mix of more impacted non-South regions, and strong in-line growth of 16 percent compared to peers in the South, noted Emkay Global.
The brokerage kept its 'buy' rating intact, with a price target of Rs 4,000 apiece. "Titan has underperformed Nifty 50 in the last three months/12 months and an improved growth/commentary bodes well for a re-rating," said Emkay.
International brokerage Macquarie maintained its 'outperform' call on Titan, with a target price of Rs 4,100 per share. The brokerage noted that the Q1 beat was led by a stronger jewellery margin.
What stood out was Titan's resilience in margins, which improved YoY due to cost optimisation measures. It also upheld its margin guidance for FY25 for 11.5-12.5 percent jewellery margin despite the expected reduction in discounting pressures.
Nuvama Institutional Equities upgraded Titan to 'buy' with a target price of Rs 3,955 per share. Titan outlined a 15 percent CAGR target for the jewellery segment until FY27, including the opening of over 350 stores.
In the Q1FY25 earnings call, Titan said it accelerated its store expansion plans, guiding for 180–210 new stores in FY25 with particular emphasis on the Mia brand. As a result, Nuvama is bullish on the player.
"However, our revenue CAGR of 16.6 percent implies a store-level revenue CAGR of 7 percent that is below the long-term average of 9 percent CAGR that Titan has seen historically," said Nuvama.
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