Titan, a leader in the jewellery and watch segments, has reported a better-than-expected performance for the second quarter (Q2) of 2024, driven by strong consumer demand, particularly in the gold jewellery segment. The Tata Group company saw a 25% growth year-on-year (YoY) for the quarter that ended in September. This update comes as brokerages reaffirm their positive outlook on the company, highlighting Titan's ability to outperform in a challenging market environment.
Gold demand surge following customs duty reduction
A key factor in Titan's Q2 performance was the surge in consumer demand for gold jewellery following a reduction in customs duty on gold imports. The Indian government lowered the duty from 15% to 6%, which provided a significant boost to sales during the quarter. As per Titan's quarterly business update, this reduction contributed to a double-digit increase in gold sales, helping the company achieve better-than-expected results.
Titan's domestic jewellery operations grew by 25% YoY in Q2, marking a strong recovery after a softer Q1. The company reported that customer demand for jewellery picked up momentum during the quarter, with the reduction in customs duty playing a crucial role in this growth.
Titan adds 75 new stores in Q2
In addition to its strong performance in the jewellery segment, Titan continued to expand its retail footprint during the quarter. The company added 75 new stores across its various business segments, taking its total retail network to 3,171 stores. This expansion is part of Titan's strategy to enhance its presence across different regions and increase its market reach.
For investors looking to buy shares online, this expansion highlights Titan's commitment to long-term growth through both retail expansion and strong product offerings.
Jewellery sales outperform expectations
Brokerages have taken a positive view of Titan's Q2 performance, with several firms highlighting the company's ability to exceed expectations across key business segments. Macquarie, a leading brokerage, has reiterated its 'outperform' call on Titan, setting a target price of ₹4,100 per share. The brokerage cited better-than-expected jewellery sales as a major factor driving its optimism.
Macquarie noted that Titan's Q2 jewellery sales exceeded its expectations, with 26% growth in the segment compared to its earlier forecast of 15%. This outperformance in the jewellery business, combined with healthy sales growth in watches, helped offset weaker performance in other segments, such as eyewear. Investors seeking to buy shares online may take note of the company's ability to consistently exceed expectations in key areas like jewellery, which remains a critical driver of its overall growth.
Brokerage recommendations on Titan
Titan's strong Q2 performance has prompted brokerages to revise their earnings estimates for the company. Domestic brokerage Emkay Global has recommended a 'buy' on Titan shares, raising its target price to ₹4,400 per share. Emkay believes that Titan's outperformance in Q2 will help address investor concerns about potential moderation in growth. The brokerage expects a 4-5% increase in the company's earnings estimates following its Q2 results.
International brokerage Citi, however, maintained a 'neutral' call on Titan, keeping its target price at ₹4,110 per share. Citi acknowledged Titan's strong jewellery sales but noted some challenges in the solitaire jewellery segment. The brokerage attributed the decline in solitaire sales to uncertainty in the international diamond market, where price fluctuations have been driven by the rise of lab-grown diamonds. Investors looking to buy shares online should consider both the positive and neutral outlooks presented by different brokerages before making investment decisions.
Key takeaways
Titan's Q2 business update has demonstrated better-than-expected performance, driven by strong consumer demand for gold jewellery following the reduction in customs duty. With a 25% YoY growth in jewellery sales and the addition of 75 new stores, Titan continues to strengthen its market position. For investors looking to buy shares online, Titan's ability to exceed growth expectations and its diverse product offerings make it a compelling option for long-term investment.
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