Stories
Titan Shares Plummet As Q2 Growth Misses Major Brokerage Expectations
- •Titan shares experienced a sharp decline of about 4.71 percent, falling to Rs 4,335.60 following a lower-than-expected Q2 business update.
- •While Titan reported solid overall business growth with consumer revenue up 25 percent, it failed to meet the aggressive expectations of certain brokerages.
- •JP Morgan noted that domestic jewelry business growth came in at 21 percent, which was 4 percentage points lower than its 25 percent estimate.
- •Other cited reasons for the stock reaction include slower growth in the number of buyers, lower gold coin sales, and a shift in festival timing.
- •Despite the recent stock drop, major brokerages like HSBC, JP Morgan, Morgan Stanley, and CLSA maintain positive ratings with higher target prices.
Key Questions Answered
Titan's shares fell by about 4.71 percent because some brokerages felt that despite strong overall business growth, its performance fell short of expectations. Specifically, brokerages like JP Morgan and HSBC noted that domestic jewelry business growth and buyer numbers were lower than anticipated, while festival-related demand shifted towards the third quarter.
Despite the short-term stock decline, major brokerages maintained a positive outlook and positive ratings for Titan. HSBC issued a buy rating with a target of ₹5,510, JP Morgan and Morgan Stanley kept overweight ratings with targets of ₹5,540 and ₹5,483 respectively, and CLSA maintained an outperform rating with a ₹5,590 target.
Lower sales of gold coins and a sluggish increase in the number of purchasing customers contributed to the weaker-than-expected growth. Additionally, the timing of the festival season shifted, causing some festive shopping to be pushed further ahead into the third quarter.
