Titan Company Ltd recently released its Q4 results, which fell short of analyst estimates by 9-12 percent. The company experienced a 70-100 basis points jewellery margin miss and higher subsidiary loss, leading to downgrades in its earnings projections for FY25 and FY26.
Despite a healthy 20 percent growth in jewellery topline, analysts attribute the margin miss to high competition and a higher gold mix in studded sales. Emkay Global pointed out that the near-term EPS growth will be impacted by elevated gold prices and increased promotions.
Emkay Global also highlighted Titan’s focus on share gains over near-term margins, as the company’s growth outlook remains strong at 20 percent CAGR. Although Titan maintained its guidance of a jewellery EBIT margin band of 12-13 percent, analysts predict that it may lean towards the lower end, especially in Q1.
Following the Q4 results, brokerage firm Emkay Global has cut its earnings estimates by 5-6 percent due to near-term margin challenges but recommended buying into any significant corrections. Nuvama also noted a 9 percent miss in consensus earnings, primarily due to weaker jewellery margins for two consecutive quarters. As a result, they downgraded the stock to ‘HOLD’ from ‘BUY’ with a revised target price.
Motilal Oswal highlighted the subdued near-term growth outlook for Titan Company, citing high gold inflation affecting demand sentiment. Despite these challenges, the company remains optimistic about its growth prospects, driven by new store additions, attractive designs, and market share gains.
In conclusion, despite near-term challenges, analysts remain positive about Titan Company’s long-term growth potential. However, they have adjusted their EPS estimates for FY25 and FY26 due to competitive pressure on margins. Investors are advised to consult with a qualified financial advisor before making any investment decisions.