Titan Shares Fall After Weaker-Than-Expected Q3 Business Update
Initial Q3 trends were slightly weaker-than-expected, Morgan Stanley said, adding that growth was slower in second half of Q3.
Shares of Titan Company Ltd. declined the most since Dec. 15 after the company reported a weaker-than-expected third quarter business update.
The jewellery and watch-maker, in a stock exchange filing, said it has seen 12% sales growth year-on-year in Q3 on healthy festive demand.
The initial third-quarter trends were slightly weaker-than-expected, Morgan Stanley said in its investor note. "Growth was slower in the second half than the first half of the quarter."
Titan Q3FY23 Updates (YoY):
Combined sales growth of 12% in Q3.
Jewellery business grew 11%, while watches and wearables segment grew 14%.
Eyecare vertical registered 10% growth.
Fashion, fragrances and apparel businesses grew 75%.
Subsidiaries TEAL and CaratLane grew 58% and 50%, respectively.
On standalone basis, Titan had 2,362 stores as of Dec. 31.
Source: Exchange filing
Shares of the company closed 2.11% lower on Monday as against 1.35% gain in benchmark Nifty 50.
The scrip lost as much as 2.77% intraday, the most since Dec. 15.
Total traded volume was 2.5 times the 30-day average. The relative strength index stood at 40.
Out of the 33 analysts tracking the stock, 25 maintained 'buy' call, while four analysts suggested a 'hold' and four recommended 'sell', according to Bloomberg data. The average of 12-month consensus price target implied an upside of 20%.
Here's What Analysts Have To Say:
Morgan Stanley
Maintains 'overweight' call on the stock with target price Rs 3,000, implying a potential upside of 18%.
Morgan Stanley says initial 3Q trends were slightly weaker than expected, with 11% year-on-year growth in the Jewellery division and 12% at the company level, on a high base.
Growth was slower in the second half than the first half of the quarter.
MS still holds a bullish view on the near- and medium-term growth outlook.
Risks To Upside: faster consumption recovery, easing competitive pressures, faster market share gains, favorable product mix and lower discounts.
Risks To Downside: increase in Covid-19, price competition, consumer promotions and discounts, investments and weak performance in new businesses.
Motilal Oswal
Maintains 'buy' call with target price Rs 3,080.
Motilal Oswal says earnings growth visibility for Titan remains strong.
The runway from growth in jewellery segment is long, with a market share of about 6%.
The structural investment case for Titan is intact.
Dolat Capital
Keeps 'reduce' rating on the stock.
The brokerage expects Titan to report about 12% revenue growth and about 13% Ebitda margins in Q3.
This is lower on sequential basis owing to reduced low price inventory.