Titan Q1 Results Review: Analysts Remain Optimistic Even After Profit Dip

Here's what brokerages have to say about Titan Co.'s Q1 FY24 results:

Motilal Oswal Financial Services Ltd.

• Retains 'buy' rating with a target price of Rs 3,325 apiece, implying a potential upside of 12%.

• Titan's strong financial position and efficient distribution model have allowed it to outperform its competitors in terms of store expansions. It aims to increase jewellery revenue by 2.5 times by FY27, implying an impressive 20% annualised growth.

• Given its current share of 7% in the Rs 4 lakh crore market, there is significant room for growth.

• The gradual recovery in the studded ratio is expected to support improved gross margins in the future.

• Its positive growth outlook, favourable industry trends, and strong balance sheet make it a compelling option in the discretionary sector.

• In the decade ending FY23, Titan clocked a net sales, Ebitda and PAT CAGR of 15%, 17%, and 16%, respectively. These numbers easily place the company among the best performers over this period.

Nuvama Institutional Equities

• Maintains 'buy' rating with a target price of Rs 3,425 apiece, implying a potential upside of 15%.

• Some of the key risks include a reduction in customs duty, which is currently at 10%; a poor macro-outlook could lead to a prolonged slowdown in the company’s growth as its revenue depends on discretionary spending; volatility in gold prices; and potential import curbs.

• Titan has maintained jewellery margin guidance at 12–13%, which is comforting.

• The brokerage has trimmed margins but kept them at the lower end of guidance (12.5%); it has also lowered FY24 EPS by 4%.

Dolat Capital Market Pvt.

• Downgrades to 'sell' with a target price of Rs 2,930, implying a potential downside of 2%.

• Though Titan’s Q1 profitability was lower than expected, the brokerage has broadly maintained FY24 E and FY25 E EPS estimates at Rs 42.5 and Rs 48.5, respectively, as it expects the profitability will improve significantly going ahead.

• It has revised the revenue estimates by 4.2% for FY24 E upwards to factor in higher than estimated sales performance in Q1 FY24.

• However, it lowered its margin estimates by 40 basis points.

• The revision in margins is not very significant, though, as it expects that margins will improve significantly in the ensuing quarters with the launch of new products and the anticipated rise in studded jewellery sales.

Emkay Global Financial Services Ltd.

• Retains 'hold' rating on near-term margin uncertainty, with a target price of Rs 3,000, implying a potential upside of 0.8%.

• Weak margins a killjoy for topline growth excitement.

• The brokerage, however, stays confident on Titan's market share gains, cross-functional strengths and incremental growth potential from international, as well as Taneira and handbags.

• The street's margin estimate is now expected to gravitate to the lower end of the guided band on Q1 disappointment and high-competitive intensity/hallmarking. The brokerage pegs FY24 E margins at 11%.