Why did Titan shares tumble 3% despite stellar Q2 business report?

Titan share price: Late Rakesh Jhunjhunwala-backed Titan shares fell as much as 2.95 per cent to hit an intraday low of Rs 3,555 per share on Monday, October 7, 2024. 

Titan share price dropped despite the company reporting robust business performance for the September quarter (Q2FY25).

Titan Q2FY25 business update 

In its jewellery division, domestic operations saw a considerable year-on-year (Y-o-Y) growth of 25 per cent in Q2, rebounding from a relatively weak Q1. The surge in consumer demand, Titan said,  was largely attributed to the reduction in customs duty on gold imports, which dropped from 15 per cent to 6 per cent, resulting in a strong double-digit increase in plain gold sales. 

While the non-solitaire studded segment witnessed high double-digit growth, the solitaire segment faced challenges due to price volatility and supply-demand dynamics in international markets, leading to low double-digit overall growth in studded sales. 

The launch of new collections and marketing campaigns also contributed to an 11 per cent year-on-year increase in buyer growth, with like-to-like (secondary) sales growth in the mid-teens. The company also opened a new Mia store in Abu Dhabi during the quarter and added a net total of 23 new stores in India, with 11 each for Tanishq and Mia, and one for Zaya.

In the Watches & Wearables segment, the domestic business grew approximately 19 per cent year-on-year, with analog watch revenues up around 25 per cent, driven by both volume and value increases. 

The premiumisation trend remained a key growth factor, although the wearables category saw a low double-digit revenue decline. The division added 34 new stores (net), including 18 in Titan World, 14 in Helios, and 2 in Fastrack.

The EyeCare segment recorded a 6 per cent year-on-year growth, with secondary sales growths showing similar trends. Titan Eye+ opened two new stores in India during the quarter.

In Emerging Businesses, Taneira's revenue grew around 11 per cent year-on-year, with four new store openings in cities like Indore and Prayagraj. Fragrances & Fashion Accessories saw a revenue increase of about 17 per cent year-on-year, with fragrances growing by 19 per cent and fashion accessories by 11 per cent. Caratlane's business achieved a notable 28 per cent year-on-year growth, driven by activations and increased brand searches, with buyers growing by 24 per cent and like-to-like growths at 21 per cent. Caratlane added 11 new domestic stores, bringing its total to 286 stores across India.

What do analysts say?

Titan's Q2 business update figures have outperformed analysts’ growth expectations across most segments. While the revenue mix may be slightly weaker due to low double-digit growth in the high-margin studded segment, analysts believe Titan is well-positioned to meet its approximately 12 per cent jewellery Ebit margin guidance for FY25. 

The strong Q2 performance is further expected to alleviate investor concerns about potential growth moderation and could lead to a 4-5 per cent increase in earnings estimates. 

Thus, Emkay analysts recommend a ‘Buy’ rating with a revised target price of R 4,400 per share, based on a valuation of 65 times the estimated earnings per share for September 2026.

Titan background

Titan Company Limited is an Indian lifestyle company that manufactures a diverse range of products, including watches, jewellery, and eyewear.

Titan share price history

Over the past year, Titan shares have increased by about 10 per cent, although they have dipped approximately 2 per cent year-to-date (Y-T-D). In the last six months, the stock has declined over 3.5 per cent. 

Ast 10:38 AM, Titan shares were trading 1.84 per cent lower at R 3,595.90, while the BSE Sensex was up 0.09 per cent at 81,758.73.