Titan Co.'s net profit in the first quarter of fiscal 2025 fell, despite a rise in revenue. Analysts are cautious due to expansion among competition. However they are optimistic on growth in the second quarter on the back of reduced import duty, pent-up demand and expansion plans.
The company's net profit fell 5% year-on-year to Rs 715 crore in the first quarter of fiscal 2025, missing analysts' estimates. The watch maker's margins contracted to 9.4% from 9.5%.
However, its revenue rose 11.5% YoY to Rs 13,266 crore, beating the Bloomberg estimate of Rs 12,642.7 crore. Its Ebitda also rose 11% to Rs 1,247 crore.
High gold prices, fewer wedding days, and a heatwave contributed to the overall decline in revenue, according to Emkay Global.
In the jewellery segment, Ebit margins improved by 20 bps to 11.2% due to cost optimisation. The India business grew by 8% year-over-year, with CaratLane showing an 18% growth.
The company is also focusing on lab-grown diamond inquiries and remains confident of certifying natural diamonds over LGDs.
Citi maintained a 'neutral' rating on the stock citing store expansion of peers. However, Nuvama had a 'buy' rating on the stock as it sees international business and the Mia and CaratLane brands driving growth.
Here is what brokerages have to say about Titan's first quarter performance.
Citi
Maintains 'neutral' rating with target price of Rs 3,510 per share, implying an upside of 1.7%.
Absolute valuations remain high
Competition due to store expansion by existing players and entry of new player (Novel Jewels by Aditya Birla) are risks.
Slowdown in the pace of market share gain and margins/earnings downgrade are also risks.
Nuvama
Has a 'buy' rating on the stock with a target price of Rs 3,955 per share, implying an upside of 15%.
Next levers of growth would come from the scale up of international segment, Mia and CaratLane.
Titan had outlined a 15% CAGR target for the jewellery segment till FY27.
Building in a revenue CAGR of 16.6% in jewellery segment till FY27.
Factors in margins of 12% in jewellery, as guided by management in.
Emkay
The brokerage has maintained a 'buy' rating on the stock with a target price of Rs 4,000 per share, implying an upside of 15%.
Despite a weak Q1, Q2 trends show pent-up demand with reduction in import duty and studded activation boosting sales.
Standalone revenue grew 9% (ex-bullion), driven by 15% growth in watches, moderate growth in jewellery, and slower growth in eyewear/emerging segments.
High gold prices, election-related restrictions, fewer weddings, and heat waves impacted footfalls and overall growth.
Ebit margin guidance remains at ~12%, with Q1 gains led by cost optimisations and stable gross margins, international jewellery contributed ~3% to sales.
Titan added new stores for Tanishq, Mia, Zoya, and CaratLane, with plans for 40-50 new Tanishq stores and 20-30 refurbishments in FY25.
Titan said it has largely maintained its market share among top jewellery players and anticipates higher marketing spends due to rising competition.
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