On Wednesday, Titan Company's share price target was lowered by BofA Securities from INR 3,800.00 to INR 3,550.00, though the firm maintained a Buy rating on the stock. The adjustment follows Titan's second-quarter fiscal year 2025 performance, which showed strong revenue growth but a sharper-than-expected dip in adjusted jewellery EBIT margin.
Titan reported a 24% year-over-year growth in total revenue and a 26% increase in jewellery (excluding bullion) revenue for the quarter. This success was attributed to a 12% rise in buyer growth, bolstered by robust demand for gold jewellery and coins/bullion, particularly after the customs duty cut. Studded jewellery growth remained in double digits, with non-solitaire jewellery performing well. However, sales of large size solitaire were impacted, potentially due to slower investment demand and global price uncertainty.
Despite the positive growth in revenue, Titan experienced a decline in its adjusted jewellery EBIT margin by 270 basis points to 11.4% in the second quarter. The drop in margin was primarily due to a weaker studded mix, which accounted for 30% of sales compared to 33% in the same quarter of the previous fiscal year, and increased advertising and promotion expenses.
Management at Titan highlighted that the jewellery growth momentum continued into the festive season, indicating a sustained consumer interest in the company's offerings. The lower margin has been a point of focus, as it diverged from the otherwise strong top-line performance of the company.
In summary, while BofA Securities has reduced the price target for Titan Company, the firm's outlook remains positive with a continued Buy rating, reflecting confidence in the company's market position and growth trajectory despite the recent margin pressures.
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