Jefferies Cuts Target for Titan; Nomura Lowers Price Aim for ABB India

Titan Company Ltd shares are drawing attention on Wednesday following the company’s Q2 report, which revealed underwhelming margins in its Jewellery segment, leading to a 100 basis-point reduction in margin guidance for FY25. 

Although the segment benefited from a recent cut in customs duties that stimulated jewellery sales, the margins reported were lower, affected by a weaker product mix featuring fewer high-margin studded pieces. Consequently, several foreign brokerages have revised their target prices for Titan downwards post-Q2 results.

Jefferies noted that while Titan’s Q2 met its own conservative expectations, it fell short of broader market consensus. The company’s commentary on demand trends was cautiously optimistic, but the lowered jewellery margin guidance could negatively influence investor sentiment, partly due to softer demand for solitaire products. 

Jefferies has reduced its earnings per share (EPS) estimates by 3-7% and maintains a "Hold" rating, setting a revised target price of ₹3,400, down from ₹3,600.

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Goldman Sachs similarly adjusted its outlook, cutting its FY25 EPS forecast by 8.7% to account for lower-than-anticipated margins and the impact of a one-time jewellery loss. The brokerage has also revised its jewellery EBIT margin estimates for FY25 from 12% to 11%, and further reduced its FY26/27 margin forecasts, citing increased competitive pressure. 

This led Goldman Sachs to lower its target price to ₹3,650 from ₹3,750, while maintaining a "Buy" rating.

Titan reported a 23% drop in Q2 net profit, which fell to ₹704 crore from ₹916 crore year-on-year, falling short of analysts’ projections of ₹990 crore. However, total income for the quarter grew 26%, reaching ₹13,660 crore compared to ₹10,837 crore in the same period last year.

Jefferies flagged concerns over a slowdown in urban spending, heightened competition in the jewellery market, and an unfavorable product mix as factors that could keep Titan’s stock price range-bound in the near term.

A one-time loss of ₹550 crore, resulting from changes in the gold import duty structure, was also highlighted. Titan, which hedges its gold inventory, incurred a ₹290 crore impact in Q2, with the remainder expected in the following quarter. 

Goldman Sachs explained that this loss stemmed from Titan’s strategy of hedging around 40% of its gold inventory through gold leases from banks, which are not shielded from changes in import duties. However, no lasting impact on FY26 or FY27 profits is anticipated due to this issue.