Macquarie has given Titan Co. an 'outperform' rating and a target price of Rs 4,150. The brokerage expects healthy demand to aid performance.
"Our industry check points to healthy demand in the jewellery segment in first quarter of fiscal 2025-26 despite elevated gold prices. While footfall has moderated in June, we expect Titan's jewellery segment to see 21% sales growth in first quarter of fiscal 2025-26," it said.
The pace of customer adoption for lab grown diamonds could be hit if recent change in certification by GIA for lab-grown diamonds is adopted by other certification agencies, according to the brokerage. This, along with demand recovery seen in mined diamonds, makes Macquarie hopeful of a steady product mix improvement.
Macquarie's confidence in 11-11.5% FY26E jewellery Ebit margin guidance is further supported by its ability to counter competition through new launches. "See sales strength reflected in Ebit, which was missing over the last few years," the brokerage added.
The Tata group firm reported a 13% increase in its consolidated profit after tax, reaching Rs 871 crore for the March quarter. This growth was driven by robust sales, with the company previously posting a PAT of Rs 771 crore for the January-March period of FY24.
The company's revenue surged by 19.4%, amounting to Rs 14,916 crore, compared to Rs 12,494 crore in the same period last year. This figure exceeded Bloomberg's estimate of Rs 13,693 crore. Additionally, Titan's earnings before interest, taxes, depreciation, and amortisation rose by 29.1% to Rs 1,537 crore, surpassing the estimated Rs 1,354 crore. The company's margins expanded to 10.3%, up from 9.5%, and higher than the estimated 9.9%.
Net profit for the quarter increased by 13%, reaching Rs 871 crore, compared to Rs 771 crore in the previous year, and exceeding the estimated Rs 855 crore.
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