Titan gains on positive outlook as Q3 business update impresses analysts

Titan's jewellery division's domestic sales grew 21 percent, led by double-digit buyer growth and moderate improvement in average selling prices.

Shares of Titan opened higher on January 8 after the company's December quarter business update impressed analysts. The Tata Group firm's Jewellery business grew 23 percent on-year in Q3 FY24, led by a double-digit buyer growth and moderate improvement in average selling prices. Titan's store expansion remained strong in the quarter, and growth for other segments too was impressive, said Citi analysts.

The maker of jewellery and watches added 90 outlets in the October-December period, taking the group's retail presence to 2,949 stores. Its watches and wearables business grew 21 percent on-year.

The growth in gold (plain) and coins in this festive quarter exceeded the studded sales growth driven by higher consumer interest in gold despite elevated prices and volatility, said Titan.

At 9:21 am, Titan shares were trading 1.12 percent higher at Rs 3,755.05 on the National Stock Exchange (NSE).

According to HSBC, the strong and consistent results reinforce Titan’s structural attractiveness. The brokerage has a 'buy' rating on the Titan stock with an increased target price of Rs 4,200 per share.

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Analysts at Citi believe that Titan has a good growth momentum. However, there is a need to monitor its margin trajectory.

The rise in the gold and coin sectors within the jewelry space was particularly notable in Q3. The company made strategic investments in exchange programmes and consumer offers, maintaining robust store expansion and witnessing impressive growth across other segments, noted Citi as it put a 'neutral' rating on the stock with a target price of Rs 3,650 per share.

Titan's EyeCare division revenue declined by 3 percent YoY in the December quarter. Titan Eye+ opened two stores in the Gulf, one each in Dubai and Sharjah with no incremental additions (net) during the quarter.

Titan's Caratlane grew by 31 percent on-year. In the emerging businesses segment, Taneira's revenue grew 61 percent YoY. The brand opened 11 stores during the quarter. The fragrances and fashion accessories revenue declined 9 percent YoY.

Morgan Stanley highlighted that Titan has seen over 20 percent growth in the jewellery segment for the fourth consecutive quarter. Titan's strategy involving regular gold exchange programmes is proving successful, the brokerage noted.

However, challenges persist in areas like product mix, exchange programmes, consumer offers, and wedding-related sales, which remain key differentiators year-on-year, it said.

Morgan Stanley has an 'equal weight' rating on the stock with a target price of Rs 3,190 per share.

Also read | Titan Q3 update: Revenue growth at 22% YoY, total 90 stores added

In the previous session on January 5, Titan shares ended marginally lower at Rs 3,713.05 on the National Stock Exchange (NSE). The stock has jumped nearly 50 percent in the last one year, outperforming the benchmark Nifty 50 which has risen 20 percent during this period.

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