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Shares of Titan Company dropped 3 per cent to Rs 2,470.70 in Monday’s intra-day trade, in an otherwise firm market, after the company’s jewellery division (excluding bullion sales) reported around 11 per cent year-on-year (YoY) growth in the December quarter (Q3FY23).
Healthy new buyer growths in the festive period, higher value purchases in the studded category and unique new collections for the season helped the division to achieve growth during the quarter.
At 10:10 AM; Titan traded 2 per cent lower at Rs 2,496 apiece. In comparison, the S&P BSE Sensex was up 1.2 per cent at 60,623.
Meanwhile, in the past one month, Titan has underperformed market as shares fell 5 per cent, as against 2.6 per cent decline in the Sensex. In the past three months, the stock declined 9 per cent, as against 4 per cent rise in the benchmark index.
The leading jewellery and watchmaker of Tata Group Company recorded 12 per cent YoY growth in its standalone business in Q3FY23, led by healthy consumer demand, spurred by vibrant festive season.
“The positive consumer sentiment helped all categories clock healthy double-digit growths despite a high base in the same period of last year,” Titan Company said.
The company also continued network expansion as it added 111 stores in October-December, taking the total number to 2,362 at the end of the quarter.
“The sales from studded category moderately outpaced gold jewellery (plain) segment growth compared to the same period last year. Wedding sales grew in-line with the Division’s overall sales. Tanishq opened its first international boutique store in USA, New Jersey in December 2022. With this store opening, the international presence now spans 6 stores across Dubai, Abu Dhabi and USA,” the company added.
Analysts at Motilal Oswal Financial Services (MOFSL) believe that the earnings growth visibility for Titan remains strong. It has compounded earnings by ~20 per cent for an extended period of time.
“In the jewelry industry, which is organizing at a rapid space, it is clearly at the vanguard in terms of growth among organized players. Its runway for growth is long, with a market share of ~6 per cent. Unlike other high-growth categories, the competitive intensity from organized and unorganized peers in jewelry is considerably weaker. The structural investment case for Titan is intact,” the brokerage firm said, maintaining a ‘buy’ rating on the stock, with a target price of Rs 3,080 per share.
For FY23, the jewellery division (including CaratLane) displayed an impressive show with a growth of more than 40 per cent YoY, said analysts at ICICI Securities.
“As per our estimates, we expect Titan to exit more than 35 per cent YoY revenue growth (much ahead of the management guidance of 20 per cent). Titan has been a secular growth story with consistent market share gains from the unorganised players,” the brokerage firm added.
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