Shares of Titan Company fell nearly 4 per cent on July 8 as the stock was downgraded by JPMorgan to 'neutral' from 'overweight' rating earlier after the Tata group company shared its June quarter business update.
The international brokerage also cut its target price on Titan to Rs 3,450 from Rs 3,850 earlier.
Titan's jewellery business posted a 9 per cent revenue growth in the June quarter, falling short of already lowered expectations, according to JPMorgan. This comes after eight consecutive quarters of meeting or exceeding expectations.
High gold prices and low wedding days resulted in subdued consumer demand, thereby impacting growth overall, Titan said.
According to analysts at JPMorgan, while there is a short-term demand impact from the high gold price volatility, they remain more concerned about the moderating growth for studded jewellery, amidst an increasing consumer preference for gold and the intensifying promotional activity, which may deter the pace of new customer acquisition for Titan.
JPMorgan noted that if the highlighted factors persist, Titan's margin profile could be adversely affected. Consequently, they have reduced Titan's Earnings Per Share (EPS) estimate for FY25-27 by 5-6 per cent.
CLSA maintained its "outperform" rating on Titan with a price target of Rs 4,045. According to CLSA, any correction, as a result of a "rare soft result" should be seen as an opportunity to "accumulate" as the brokerage expects growth to return when gold prices normalise and wedding season arrives again.
Meanwhile, Goldman Sachs also called Titan's quarterly update "disappointing". However, the brokerage maintained its "buy" recommendation on the stock with a price target of Rs 3,700.
The competition did better than Titan during the quarter, which is a cause for concern, the brokerage said, adding that its jewellery margins are also likely to be under pressure.
While Goldman does believe that Titan can still achieve its guidance for FY25, it is likely to be at the lower end of the range. Titan's jewellery margins are likely to be under pressure, echoed by Morgan Stanley as it maintained an equal weight rating on the stock with a price target of Rs 3,526.
At 10 am, Titan shares were trading 4 per cent lower at Rs 3,133.00 on the National Stock Exchange (NSE). The stock is down 14 percent so far in 2024, underperforming benchmark Nifty 50 which rose around 11 percent during this period.
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