Titan shares faced selling pressure on March 4, sliding up to 2 percent after global brokerage Macquarie slashed its price target, citing the near-term impact of rising gold prices on jewellery demand.
At 11.34 am, shares of Titan were trading at Rs 3,025.10 on the NSE, sitting on the list of top losers on the Nifty.
Even though Macquarie slashed its price target for Titan by 4 percent to Rs 4,000, the firm still went on to retain its 'outperform' call on the stock. Much of the adverse price action on the stock was executed to factor in the negative near-term headwinds of higher lease costs caused by Trump's tariff plans which has resulted in a spike in gold prices.
Gold prices continued to rise higher amid growing market volatility and escalating global trade tensions, encouraging investors to go towards the safe haven asset. Despite some profit booking at higher levels due to a sharp rise in the US dollar, the precious metal closed February with gains, marking its second consecutive month of rallying.
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Not just that, the yellow metal also hit 10 fresh all-time highs last month, a testament to rising investor uncertainty and a growing preference for wealth preservation. As a time-tested safe-haven asset, the yellow metal continues to attract demand during economic turbulence. However, higher gold prices have a damaging impact on jewellery demand, which is likely to impact Titan's near-term growth.
To that effect, Macquarie also slashed its FY25-27 earnings-per-stock estimates for Titan by 3-4 percent due to higher lease costs and near-term impact on jewell2ry demand from rising gold prices.
Despite the near-term headwinds though, Titan remains the preferred pick in the consumer space for Citi. The brokerage also believes that a rise in gold lease costs for smaller players would further strengthen Titan's competitiveness.
Additionally, the firm remains confident that the growing adoption of lab-grown diamonds will not have a significant impact on Titan's growth.
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