Jhunjhunwala’s Prime Stock Faces Challenges: Is It a Buy at Current Prices

Titan’s Q3 Profits Fall Short of Estimates: Studded Jewellery Share Decline, Muted Demand, and Increased Competition Impact Performance.

Titan Company, Rekha Jhunjhunwala’s top pick, faced margin pressure in Q3 with a notable 11% earnings miss. The Jewellery segment saw a weaker margin of 12.2% (against an estimated 13%), and Watches & Wearables had a margin of 5.6% (against an estimated 13%). This suggests softer demand and heightened competition. Analysts predict a limited upside for Titan, with targets ranging from Rs 3,600 to Rs 4,100.

As of the end of the December quarter, Rekha Jhunjhunwala’s 5.37% stake in this Tata group firm was valued at over Rs 17,200 crore, based on Friday’s closing price of Rs 3,613.05

Kotak Institutional Equities adjusted its estimates and revised the fair value of Titan stock to Rs 3,750. This revision takes into account the robust overall top-line growth for Titan, but notes that the margin print and studded share were slightly weak.

Prabhudas Lilladher reports that Titan’s Q3 profit fell short of estimates, primarily attributed to a 200 basis points decline in the share of studded jewellery. The December quarter experienced muted demand, influenced by elevated gold prices and increased competition from smaller, unorganized players.

Prabhudas Lilladher views Titan as a strong contender in emerging lifestyle segments poised to benefit from increasing discretionary spending. With a trading multiple of 58.4 times FY26E EPS and a projected 23% EPS CAGR over FY24-26, they assign a target price of Rs 3,627 (revised from Rs 3,640) based on Discounted Cash Flow (DCF) analysis. The recommendation is to accumulate Titan on declines for potential long-term gains.

Kotak Institutional Equities acknowledges Titan’s robust overall top-line growth but notes a slightly weak margin print and studded share. Adjusting estimates, they revised the fair value of the stock to Rs 3,750 from Rs 3,775 earlier, suggesting a valuation of 60 times FY2026E PE.

Nuvama attributes the Jewellery margin miss for Titan to factors such as a lower studded ratio (24% compared to 26% YoY), increased competitive intensity amid a spike in gold prices, and elevated marketing investments.

Nuvama indicates that diamond prices did not significantly impact margins for Titan. Despite performance disparities across Titan’s segments, the report emphasizes the sustained strength in January’s Jewellery demand. With a 4% downward adjustment in FY24 PAT and a rollover to FY26, the revised target is Rs 4,106 (65x PE plus Caratlane at 4x sales, previously Rs 3,795). The report recognizes potential risks to earnings, primarily from jewellery margin trends, but maintains a ‘BUY’ recommendation.

“Centrum Broking expresses optimism about Titan’s operating performance, citing robust demand across business segments. The company’s international market position is viewed as promising.

The strategy focusing on serving millennials, meeting aspirational demands through new designs and channels, and an increasing share of wedding jewellery is expected to yield positive results. The report also notes potential gains for Titan in market share due to rising interest rates and industry formalization.”

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