Analysts say Titan's valuations are excessively high and growth has slowed down.
On Friday, the company reported its third quarter ended December 2022 (Q3FY23) update with double digit growth across all divisions. Revenue for the jewellery division grew 11% on year with studded category moderately outpacing plain gold jewellery.
The watches division registered 14% on year growth led by strong traction in wearables segment. The company added more than 110 stores across divisions taking total store count to 2,362 stores. Emerging business, which includes fragrances and Indian wear grew 75% on year led by 121% growth in Taneira brand.
"Despite a decent Q3 business update from Titan the outlook remained cautious while the street was expecting a 15% plus growth during festive season but reported a 12% growth in combined sales year-on-year across standalone businesses which is below expectations," said Prashanth Tapse, research analyst, senior vice president research, Mehta Equities Ltd.
Technically, the stock is under pressure from the last four trading sessions, and looking at the chart trend it can test below 2,450 level in the near term.
According to global brokerage, Morgan Stanley, the initial Q3 trends were slightly weaker than expected, and the growth was slower in the second half of the year versus first half of the quarter. The brokerage has maintained 'overweight' rating on the stock.
"Prima facie, the growth trajectory appears to have moderated but we believe the growth rate should be viewed in the context of a very strong base of Q3FY22," said brokerage ICICI direct research in its report.
Brokerage Macquarie has maintained 'outperform' rating on the stock, and raised FY23/24/25 estimates earnings per share (EPS) by 2% each to reflect sales strength across segments.
Similarly, brokerage CLSA too has maintained 'outperform' rating for the stock on the back of 12% growth in overall revenue versus estimate of 13.4% growth.
According to Mintgenie poll, 30 analysts recommend ‘buy’ rating for the stock.
