Titan shares extend fall for 5th session; down 4% post Q1 update

Shares of Titan Company tumbled 4% in early trade on Monday, in a subdued broader market, after the Tata Group firm reported muted growth in June quarter, impacted by higher gold prices and lower wedding days. The stock of watch-to-jewellery retailer has been under stress for five sessions and dropped nearly 9% during the same period.

Continuing its losing streak, Titan shares opened lower at ₹3,228, down 1.2% against the previous closing price of ₹3,269.30 on the BSE. Extending opening losses, the Tata Group stock declined as much as 4% to ₹3,135.30, while the market capitalisation slipped to ₹2.79 lakh crore.

The counter touched its 52-week high of ₹3,885 on January 30, 2024, and a 52-week low of ₹2,882.60 on July 7, 2023. The share price of Titan has risen 3% in a year, while it has fallen 15% in six months and 8% in a month.

Titan released its business update for the quarter ended June 30, 2024, in a post-market release on July 5. As per the company, it registered a 9% year-on-year (YoY) growth in Q1 FY25, while it added a total of 61 stores (net) during the quarter, taking combined retail network presence to 3,096 stores. Tanishq, a jewellery brand and a division of Titan, added a new store in Muscat (Oman) during the quarter. Of the 33 new store additions in India, 11 stores were in Tanishq, 19 in Mia and 3 in Zaya, respectively.

During the quarter under review, jewellery domestic operations grew 8% YoY, driven by double-digit growths during Akshaya Tritiya week. “However, high gold prices (20% growth YoY) and their continued firmness had an impact on consumer demand. Coupled with lower wedding days, overall sentiments were relatively muted in comparison to Q1 FY24,” it says in a release.

The company says that domestic growth came largely through increase in average selling prices whereas buyer growth was in low single digits. Gold (plain) grew in high single digits while studded growth was moderately lower in comparison.

Amnish Aggarwal, Head of Institutional Research, Prabhudas Lilladher, says that Titan’s Q1 gave a moderate 8% growth in jewellery domestic operation, led by muted consumer sentiments as gold price continue to inch up and wedding days remain lower YoY. “Studded growth came lower than plain gold which is likely to impact margins in this quarter. We believe H1 25 to remain under pressure however how festive and wedding season pans out in H2 25 will be key to monitor,” adds Aggarwal.

The brokerage says that at current market price of ₹3,269, the stock is trading at 48.1x on FY27 EPS. “We have a Accumulate rating on the stock.”

Meanwhile, watches & wearables domestic business grew 14% YoY. The revenue growth in analog came was at 17% YoY, whereas wearables witnessed a decline of 6% YoY. “Customer preferences towards premium products was clearly visible with higher growths seen in Titan, Helios channel and Nebula, Edge and Xylys,” the release notes. The division added 17 new stores (net) in the quarter consisting of 5 stores in Titan World, 5 in Helios and 7 in Fastrack respectively.”

On the ther hand, EyeCare's domestic business grew 3% YoY. The division's foray into affordable fashion is aiding volume growth for the category. 'Runway', Titan's premium sunglasses retail offering, launched its first store in Bengaluru in Jun'24. Titan Eye+ added 3 new stores (net) in India during the quarter.

In emerging businesses, Taneira's Revenue grew 4% YoY. The brand opened 4 new stores during the quarter, two of them in the new cities of Jodhpur and Nashik. The fragrances & fashion accessories revenue grew 4% YoY. Within businesses, fragrances grew by 13% YoY and fashion accessories saw a decline of 15% YoY. Caratlane's business grew 18% YoY, while it added 3 new domestic stores (net) in the quarter expanding its network presence to 275 stores pan-India.

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