Buy Rekha Jhunjhunwala's biggest bet on any dip, say analysts post Q4 results

Buy Rekha Jhunjhunwala’s biggest bet on any dip, say analysts post Q4 results

Titan Company Ltd., Rekha Jhunjhunwala’s biggest stock bet, reported a miss in consensus earnings driven by weaker jewellery margins for two consecutive quarters. Whereas jewellery topline growth was healthy at 20%, the margin miss is a factor of high competition and higher gold mix in studded sales, analysts said.

Global brokerage firm Jefferies in a note said the commentary on margin was a bit subdued, but it likes the management’s excessive focus on growth.

Jefferies, which has a ‘Hold’ rating and a target price of ₹3,500 per share on the counter, said that Titan’s share price will trade weak today. The brokerage expects the Titan Company stock to stay rangebound in the near term.

Jefferies said that it will watch out for Titan’s analyst meet at the end of this month.

Another broking firm UBS said the demand environment will remain weak, with margins to be impacted by high discounts and offers. The brokerage expects the competitive intensity to continue.

UBS has a ‘Neutral’ recommendation on the Titan stock, with a target price of ₹3,900 per share.

According to Goldman Sachs, the strong revenue growth sustained, but the competitive intensity ahead will cap its margin expansion potential for the financial year 2025. It said the management expects to maintain the current margin range of 12-13%

The brokerage has a ‘Buy’ recommendation on Titan along with a target price of ₹3,950 per share.

Domestic brokerage Nuvama said the management did indicate given the current scenario of rising gold prices, competitive intensity as well as marketing investments would stay higher, which would affect margins.

Given the weakness in margins to continue in the near term, especially in the first half of FY25, Nuvama has slashed its FY25 and FY26 profit estimates by 6% each and downgraded the stock to ‘Hold’ from ‘Buy’ earlier. The brokerage has revised its target price to ₹3,867 from ₹4,106 per share earlier.

In a note, Emkay Global said that the near-term EPS (earnings per share) growth will be hit by elevated gold prices and added promotions.

“But we like Titan’s focus on share gains (versus near-term margin), as growth outlook remains robust, at 20% CAGR. Titan upheld its guidance of jewellery EBIT margin band of 12-13%, which though would probably stay at the lower-end, as Q1 is likely to miss the band by a margin,” it said.

This brokerage has trimmed its earnings estimates by 5-6% on near-term margin pain but recommended buying into any significant corrections. Emkay suggested a lower target of ₹4,150 for the Titan Company stock.

Kotak, meanwhile, said the Titan stock is priced for perfection. “We would keep an eye on the adoption of lab-grown diamonds in India (and Titan’s studded share) and Aditya’s Birla Group’s upcoming jewelry foray,” it noted while suggesting a ‘Neutral’ rating and a lower target of ₹3,600 per share.

On Monday, the stock opened 4% lower and hit a day’s low of ₹3,385. Rekha Jhunjhunwala held 5.35% stake in Titan Company, which was worth ₹16,780 crore in today’s trade.