Titan Company slips 2% to hit over four-month low; down 14% from 52-wk high

The stock was trading at its lowest level since August 23, 2022 and has slipped 8% in the last eight trading days

Shares of Titan Company slipped 2 per cent to hit an over four-month low of Rs 2,401 on BSE in Friday’s intra-day trade as a sudden spike in gold prices raised concerns on demand for wedding jewellery going ahead into the March quarter (Q4FY23).

Today, the stock was trading at its lowest level since August 23, 2022. In the past eight trading days, it has fallen 8 per cent. With this decline, Titan Company has now corrected 14 per cent from its 52-week high level of Rs 2,790, touched on October 31, 2022.

At 02:01 PM; it was quoting 1 per cent down as compared to a 0.68 per cent rise in the S&P BSE Sensex.

Titan in its October-December quarter (Q3FY23) update recorded a steady show with double digit growth across all divisions.

Revenue for the jewellery division grew 11 per cent YoY with studded category moderately outpacing plain gold jewellery.
Healthy new buyer growth in the festive period, higher-value purchases in the studded category and unique collections for the season helped the division achieve growth during the quarter.

Prima facie, the growth trajectory appears to have moderated but ICICI Securities believes the growth rate should be viewed in the context of a very strong base of Q3FY22 (the division had recorded 37 per cent YoY growth).

Analysts at Centrum Broking expect continued strong uptick in revenue as demand is expected to be robust going forward.

“We believe the continued sales momentum across business divisions would have positive impact on the organized Jewelry retail benefiting players like Titan. In addition, we expect strong demand momentum for watches and eyewear to continue given normalized consumer mobility. Further turnaround in the caratlane, watches, and eyewear divisions and continuity in their profitability potential is not yet priced in,” the brokerage said in a report.

Meanwhile, as per CARE Ratings, Titan's superior craftmanship in jewellery, in-house design in watches segment, strong and efficient control over its operations and benefits accruing from operating leverage have helped the company garner healthy margins consistently over a period of time.

The rating agency expects Titan to continue to report operating margins in the range of 12-14 per cent going forward.

Besides, the jewellery segment that contributes the majority of the revenue for Titan is exposed to changes in regulatory policies, it said.

"In the past the industry was negatively impacted by regulatory actions such as 80:20 rule, restrictions on bullion imports, mandatory PAN disclosure requirement on purchase and imposition of excise duty. Furthermore, by introducing sovereign gold bond government has been attempting to shift the focus of consumers from physical gold. Titan will continue to remain exposed for any future regulatory action which may impact its business profile", it said.

The jewellery division of Titan is also exposed to high competitiveness from organised and unorganised players. Unorganised players dominate the market with many regional players.

CARE Ratings expects that on account of Titan’s strong brand recall it will continue to enjoy a dominant position in the segment.