Titan Share Price Falls 4% After Q1 Results: Gold Prices Impact

On Monday, Titan Company's stock price dropped over 4% during morning trades following the release of their Q1 results on Friday after market hours.

Titan's stock, which opened at ₹3320.05—4.1% lower than the previous close of ₹3,462.35—continued to slide to ₹3316 levels on the NSE on Monday.

The company's standalone net profit for the quarter was reported at ₹770 crore, almost flat compared to the same period last year, with a marginal decline of 1%. However, revenue from operations in the first quarter rose by nearly nine percent to ₹11,263 crore.

Demand in Titan's core jewelry business was dampened by increased gold prices, resulting in subdued net profit growth. Jewelry sales grew by 8.9% year-on-year to ₹9,879 crore, although this was lower than the 18.8% growth recorded in Q4. Meanwhile, sales in the Watches and Wearables segment grew by 14.7% to ₹1,021 crore during Q1.

Jefferies India Ltd analysts noted in their post-results report that Q1 was predictably muted in terms of growth and margins due to volatile gold prices, election restrictions, fewer weddings, and heat waves.

A reduction in customs duty on gold imports has caused gold prices to dip, raising hopes for a recovery in demand. Titan share price has increased by more than 5% since the budget announcements on July 23.

Analysts at Motilal Oswal Financial Services observed a healthy demand environment and a revival in footfalls following the reduction in customs duty. They maintained an optimistic growth outlook for Titan, driven by new store openings, attractive designs, and market share gains. However, they noted intense competitive pressure and emphasized the importance of monitoring execution and demand. They reiterated their BUY rating on Titan's shares, setting a target price of ₹4,000.

While analysts are optimistic about a demand boost due to the customs duty cut on gold imports, they remain concerned about potential hikes in the Goods and Service Tax (GST) on gold jewelry sales.

Jefferies India Ltd analysts, though positive on Titan in the long term, cautioned that the gold import duty cut could lead to short-term inventory losses. Despite Titan's growth outpacing several large-cap consumer peers, concerns about heightened competition and possible GST rate hikes keep them cautious. Jefferies set a target price of ₹3600 for Titan's shares.

Titan Company Ltd (Titan) is a retail company with a diverse product portfolio that includes eyewear, watches, accessories, jewelry, fashion items, and sarees. Their jewelry range features pendants, chains, earrings, finger rings, and neckwear. In the eyewear segment, Titan offers frames, ready readers, and sunglasses. Additionally, the company provides franchising, distribution, and licensing services.