Titan extends gain post Q3 business update; stock rallies over 8% in 3 days

A robust consumer traction during Diwali translated into high single-digit buyer growth along with double-digit ticket size growth

Shares of Titan Company hit an over two-month high of Rs 3,527.20, gaining 2 per cent on the BSE in Monday’s intra-day trade after it reported a healthy 25 per cent year-on-year (YoY) growth in jewellery (domestic) business buoyed by strong festive season demand.  The stock price of the owner of the Tanishq brand of jewellery stores has rallied 8.4 per cent in the past three trading days. It is trading at its highest level since October 15, 2024.

 

Titan is a leading organised jeweller in India with its trusted brand, Tanishq and is the fifth largest integrated own-brand watch manufacturer in the world. The company has a retail chain of 3,171 stores across 429 towns with a retail area of 4.44 million sq. ft. for all its brands.

 

 

Robust consumer traction during Diwali translated into high single-digit buyer growth along with double-digit ticket size growth, Titan said in its December 2024 quarter (Q3FY25) business update. Gold (plain) exhibited particularly strong momentum, growing 24 per cent year-on-year (YoY), benefiting from increased gold prices, festive and wedding purchases, it added.

 

‘Rivaah’, Gold exchange, Golden Harvest, High value studded, and blockbuster festive collections were well supported by multiple brand campaigns driving the like-to-like (L2L) growth for the quarter. Tanishq (International) added a new store each in Seattle, USA and Gold Souk, Dubai. Of the 24 new store additions (net) in India, 11 stores were added in Tanishq and 13 stores were added in Mia, the company said.

 

The company's Watches & Wearables (domestic) segment grew 13 per cent YoY. The analog watches segment maintained its FY25 growth momentum and clocked a robust 19 per cent YoY growth, driven by festive demand and well supported by healthy premiumisation trends. Consumer preferences were firmly oriented towards higher-end timepieces, particularly evident in the growths of Titan, Edge and Xylys and international brands through the Helios channel, Titan said.

 

Meanwhile, Titan’s profitability for the September quarter (Q2FY25) was quite depressed on account of the customs duty related losses, as well as the need to invest in the growth of various businesses. 

 

The company's management had indicated a good festive season demand and a pick-up in jewellery sales prior to the wedding season. Though earnings before interest, taxes, depreciation, and amortisation (Ebitda) margins of its jewellery business is expected to remain weak in FY25 due to one-time custom duty loss, it is expected to remain at 11-12 per cent in the near-term. Jewellery business is expected to grow at a compound annual growth rate (CAGR) of 18 per cent over FY24-27, according to analysts at ICICI Securities.

 

With good traction in the analog watches segment since the past few quarters backed by design innovation, premiumisation and better execution, Titan's watches business is expected to grow in double digit. This, combined with a scale-up in the wearable segment is expected to grow the revenues of watches business at a CAGR of 17 per cent over FY24-27E, the brokerage firm said.

 

A focus on sustained market share gains in its jewellery business and a strong balance sheet makes Titan the best play in the discretionary space. Analysts expect margins to be under pressure in the short-term, while the management expects an uptick in margins in the medium-term with an improved mix. Analysts expect Titan's revenues and profit after tax to grow at a CAGR of 16 per cent and 20 per cent, respectively.

 

According to technical analysts at ICICI Securities, Titan witnessed a healthy consolidation over the past four quarters, while absorbing elevated volatility. The stock is regaining upward momentum as buying demand emerged from the lower band of four quarters of consolidation. Further, a pick-up in demand tracking the festive and wedding season would also act as a tailwind, thereby, offering a fresh entry opportunity.

 

Going ahead, analysts expect the stock to gradually resolve higher and head towards Rs 3,830, with an implied target of recent consolidation (Rs 3,518- 3,230), that coincided with identical highs seen during the January and September months of CY24.