Titan Share Price Slips by 4% on JPMorgan Downgrade Due to Weak Q1 Perfromance

On July 8, Titan Company shares dropped nearly 4% after JPMorgan downgraded the stock from an 'overweight' to a 'neutral' rating following Titan's June quarter business update.

The international brokerage also lowered its target price for Titan from ₹3,850 to ₹3,450. Titan's jewellery business reported a 9% revenue growth for the June quarter, falling short of the already lowered expectations, according to JPMorgan. This shortfall comes after eight consecutive quarters of meeting or exceeding expectations.

Titan attributed the subdued consumer demand to high gold prices and fewer wedding days, which overall impacted growth. JPMorgan analysts expressed concern over the moderating growth for studded jewellery amidst increasing consumer preference for gold and intensified promotional activities, which may hinder new customer acquisition for Titan. They noted that if these trends continue, Titan's margin profile could suffer. Consequently, they reduced Titan's Earnings Per Share (EPS) estimate for FY25-27 by 5-6%.

CLSA, however, maintained an "outperform" rating on Titan with a price target of ₹4,045. They advised that any price correction due to this "rare soft result" should be viewed as an opportunity to "accumulate," expecting growth to rebound when gold prices normalize and the wedding season returns.

Goldman Sachs also described Titan's quarterly update as "disappointing" but retained a "buy" recommendation with a price target of ₹3,700. The brokerage noted that Titan's competitors performed better during the quarter and expressed concern about pressure on jewellery margins. Despite this, Goldman believes Titan can still meet its FY25 guidance, albeit at the lower end of the range.

Morgan Stanley echoed these concerns about jewellery margins and maintained an equal-weight rating with a price target of ₹3,526. At 10 am IST, Titan share price were trading 4% lower at ₹3,133.00 on the National Stock Exchange (NSE). The stock has fallen 14% in 2024, underperforming the benchmark Nifty 50, which has risen around 11% during the same period.