Titan shares rise on Q3 business update but street divided on prospects

Global broking firm Citi has assigned a 'Neutral' call on the counter and set a target price of ₹3,650 per share on good growth momentum. However, there is a need to monitor its margin trajectory.

Citi said that Titan made strategic investments in exchange programmes and consumer offers, maintaining robust store expansion and witnessing impressive growth across other segments.

Titan's absolute valuations remain high, supported by its strong medium-term business prospects driven by continued share gains, it said.

Downside risks, as per Citi, include deterioration in consumer sentiment or lower footfalls, sharp movements in gold prices and adverse government impact.

Among upside risks, are better-than-expected consumer traction, stronger traction to Titan's new product launches and innocations, company's aggressive expansion plans.

Morgan Stanley highlighted that Titan has seen over 20% growth in the jewellery segment for the fourth consecutive quarter. Titan's strategy involving regular gold exchange programmes is proving successful, it noted.

However, the brokerage said that challenges persist in areas such as product mix, exchange programmes, consumer offers, and wedding-related sales, which remain key differentiators year-on-year.

Morgan Stanley has an 'Equal weight' rating on the stock with a target price of ₹3,190 per share.

The third quarter for fiscal 2023 coincided with festivals such as Dussehra in October and Diwali in November, when buying gold is considered auspicious. The quarter also sees more weddings, which is one of the biggest drivers of gold purchases in India.

Titan's watches and wearables segment, which made up nearly 11% of the total income for the company in the previous quarter, saw a double-digit 21% year-on-year growth in the quarter. The growth in the analogue watch segment was driven by strong performances from Titan, Sonata, Helios, and other international brands.

The company's fashion and fragrances segment declined around 9%. However, its revenue in its premium fashion brand Taneira revenue grew by about 61%, with the addition of 11 new stores in different cities.

The company added a total of 90 stores during the quarter, taking the group's total presence to 2,949 stores. At the end of September quarter, Titan had 2,859 stores.