Titan had a Rough Quarter- What Is Going On?
In case you have been following the stocks of Titan in the recent past, you might have realized the sense of uneasiness among the shareholders. The renowned firm with its shining jewel grades and the credible mark simply reported a surprisingly poor result during the initial three months (Q1) of FY25. And the great question everyone is asking is; is this just a momentary setback or is something more seriously wrong?
The Jewellery Business- The Crown Jewel of Titan Loses its Lustre
To be frank, we all recall Tanishq, Mia and CaratWall when we hear Titan. Jewellery is not only a category in Titan, but it is also the pulse of Titan as only more than 80 percent of their sales and profits are through Jewellery. Therefore, when there is a fall in growth here, it becomes big.
The figures in this quarter made a sorry tale:
One-digit increases in jewellery sales (contrary to the typical doubling of the figures).
Due to high prices of gold the buyers were held at bay- who would pay high prices especially when there is no control over what is spent?
Subpar demand among the rural areas, smaller towns, which tend to be a good market, did not consume much.
However, it is not doom and gloom all the time. The company claims that later this year with festive and wedding demand, it should change its fortunes. However at present investors are spooked.
Brokerages Respond: Downgrades & Caution
A time when giant brokerages begin lowering ratings is not a good thing. These are the opinions of the specialists:
Morgan Stanley is not panicking but it is warning that poor demand may persist.
JP Morgan cites the fact that profit margins are dwindling, as gold is a costly affair, and that is pinching Titan.
Kotak institutional equities has reduced its growth projections at least at the short run.
Still, there are analysts who continue the reasoning about a long-term game of Titan. Its brand is reputable, the retailing outlet is spreading and once the prices of the gold stabilize, it may start selling again instead of being so forth.
So what do investors do?
Here is what you have to monitor, should you hold Titan shares, or consider purchasing them:
Gold Prices- A Gold market price decline would attract buyers.
Festive Season (Q3) – Diwali and weddings tend to fuel huge sales of jewellery.
Expansions of Stores Titan is opening 80-100 new stores this year- will this result in growth?
The Big Picture Temporary Slump or Long-Term Worry?
Well yes Q1 was a disappointment. But Titan is not a pseudo brand a fly by night brand but a market leader and customers have got it on their loyalties. The test is going to be the current three quarters.
Titan may recover some momentum in case the price of gold goes down and sale movies during the festive season.
In case the demand remains weak, investors may have to welcome a greater turbulence.
Concluding Words: Wait & Watch
Until the moment, the stock of Titan is heating up. However, shrewd investors understand that even the greatest companies experience rough times. It is all about patience.
You are thinking?
Is it merely a blip and a temporary situation or should investors be concerned about it?
Do you continue to keep Titan shares, or you are trying to find something better?
