Titan's share price drops by more than 3% due to disappointing Q1 growth in its jewellery business

Titan's share price drops by more than 3% due to disappointing Q1 growth in its jewellery business.

The Titan share price dropped by more than 3% following underwhelming performance in its domestic jewellery operations, which saw a modest 8% year-on-year growth. This was influenced by subdued consumer demand due to increased gold prices and fewer wedding days.

Titan Share Price Drops Over 2% Amid Weak Q1FY25 Jewellery Growth

Titan’s share price fell by over 2% during early Monday trading after the Tata Group company reported disappointing first-quarter results for FY25. The weak performance in the jewellery segment led to a decline in Titan shares by as much as 3.46%, reaching ₹3,156.15 per share on the BSE, marking the fifth consecutive session of losses.

In its Q1FY25 business update released on July 5, Titan announced a year-on-year (YoY) growth of 9%. However, its domestic jewellery operations only saw an 8% YoY increase. This was attributed to sluggish consumer demand driven by rising gold prices and fewer wedding days during the period.

The growth in Titan's domestic market was primarily due to higher average selling prices, while the increase in the number of buyers was minimal, as noted by the company.

Titan Company has released its Q1 FY25 results, showcasing mixed performance across its diverse product segments. Here’s a detailed breakdown:

Watches & Wearables: A Mixed Bag

In the Watches & Wearables segment, Titan’s domestic business achieved a commendable 14% year-over-year (YoY) growth. This growth was significantly driven by the analog watch category, which saw an impressive 17% YoY increase in revenue. However, the wearables sector faced challenges, experiencing a 6% YoY decline. Despite the downturn in wearables, Titan's focus on traditional analog watches continues to pay off, contributing positively to the segment's overall performance.

EyeCare: Steady Growth and Expansion into Affordable Fashion

Titan's EyeCare division also reported positive results, with domestic business growing by 3% YoY. A key factor in this growth is the division’s strategic move into affordable fashion, which is helping to drive volume and attract a broader customer base. The expansion into this new market segment is proving beneficial for Titan, as it aligns with current consumer trends towards accessible and stylish eyewear options.

Retail Network Expansion: 61 New Stores Added

During the June 2024 quarter, Titan significantly expanded its retail footprint, adding a net total of 61 stores. This brings Titan’s combined retail network to an impressive 3,096 stores. This expansion reflects Titan’s ongoing commitment to increasing its market presence and accessibility across India, catering to its diverse customer base.

Jewellery Segment: A Challenge for Q1 FY25

Contrary to the positive growth in other segments, Titan’s jewellery business faced a challenging quarter. The company’s Q1 FY25 performance fell short of expectations, primarily due to the weakness in the jewellery sector. According to Antique Stock Broking, this underperformance in jewellery impacted Titan’s overall quarterly results.

The brokerage firm has reiterated its ‘Buy’ recommendation on Titan shares, setting a target price of ₹4,490 per share.

However, on Friday, Titan shares fell nearly 2% after Kotak Institutional Equities downgraded the stock from ‘Add’ to ‘Reduce’. They also slashed the target price to ₹3,075 per share from the previous ₹3,600, citing concerns over multiple margin headwinds and an unfavourable risk-reward outlook.

CaratLane Shines with 18% YoY Growth, Emerging Businesses Show Steady 4% Increase, Taneira and Fashion Accessories Lead the Way

CaratLane continues its robust performance, achieving an impressive 18% year-over-year (YoY) growth, while Titan Company’s emerging businesses demonstrate steady progress with a 4% revenue increase. Notably, Taneira and the Fragrances & Fashion Accessories segments both recorded a 4% YoY growth.

Antique Stock Broking remains bullish on Titan Company’s long-term prospects, citing its strong execution and brand recognition, which enable it to capture market share across various regions, including the South. The brokerage projects Titan to achieve a compound annual growth rate (CAGR) of 21% in sales and 28% in earnings from FY24 to FY27.

For those tracking the growth trajectories in the jewellery and accessories sector, Titan Company's diversified portfolio, with CaratLane leading the charge and emerging businesses like Taneira and fashion accessories contributing to steady revenue growth, is a key player to watch.

Brokerage firm Kotak Equities has revised down Titan’s earnings per share (EPS) estimates for FY 2025-2027 by 5-6%. This adjustment reflects concerns over external challenges, including heightened competition from the Aditya Birla Group’s new venture, Novel Jewels, and the potential direct and indirect effects of LGDs on Tanishq’s growth and profitability in the studded jewellery segment.

While acknowledging Titan’s strong execution, Kotak Equities cautioned that the risk-reward profile remains unfavourable amidst these competitive pressures and elevated market expectations.

Summary

In summary, Titan Company’s Q1 FY25 performance highlights notable growth in the Watches & Wearables and EyeCare segments, alongside a strategic expansion of its retail network. However, the jewellery segment's downturn posed significant challenges. As Titan continues to navigate these dynamics, its ability to adapt and innovate across its product lines will be crucial in maintaining its market position.

For more insights into Titan’s performance and future outlook, keep an eye on our updates as we continue to track their progress in the coming quarters.