Stock Check: Titan share price down 17% in 2 months; will the wedding season boost this Nifty stock?

Titan Company is currently navigating a challenging period, with its stock down 17% over the past two months, driven by weaker-than-expected Q2 earnings and shrinking profit margins. However, the upcoming wedding season could provide a potential catalyst for recovery in Titan's jewellery segment, helping to drive margin recovery and bolster overall profitability.

Investors and traders are advised to monitor key support and resistance levels closely as these will dictate Titan’s near-term trajectory. With long-term fundamentals intact, Titan remains a stock worth considering for strategic accumulation, particularly during market corrections, said experts.

Stock Price Trend

Titan has lost 5 per cent in the last one year and over 11 per cent in 2024 so far. The stock is down 0.3 per cent in November after a 14.5 per cent decline in October. Before that, it rose for four consecutive months, rising 18 per cent between June and September.

The stock is currently down over 18 per cent from its record high of ₹3,885, hit in January 2024. Meanwhile, it has gained almost 4 per cent from its 52-week low of ₹3,059, recorded in June 2024.

Earnings Overview

Titan Company Ltd reported its financial results for the July to September quarter on November 5, highlighting a 23 per cent decline in net profit to ₹704 crore, down from ₹916 crore in the same quarter of the previous fiscal year. This decline, as per the company’s BSE filing, was despite a 25.8 per cent increase in revenue from operations, which rose to ₹13,473 crore compared to ₹10,708 crore in the previous year.

The company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin contracted significantly, dropping 430 basis points to 9.9 per cent from 14.2 per cent a year ago, as revealed in Titan’s investor presentation. Although segments like Watches and Wearables, Jewellery, and Eyecare contributed to the overall rise in revenue, profits from the company's core business (jewellery) experienced a decline for the second consecutive quarter.

Fundamental Analysis

Prabhudas Lilladher maintained a 'Buy' recommendation on Titan, setting a target price of ₹3,670 with a stop loss at ₹2,900, suggesting potential gains of up to 16 per cent from the current price levels. The brokerage noted that Titan’s stock has corrected from its high of ₹3,870 and is now consolidating at a low of ₹3,130. The impact of reduced customs duty was cited as a key reason for the profit dip in Q2.

Jefferies has maintained a 'Hold' rating on Titan but lowered its target price to ₹3,400 per share, reflecting a 7% upside potential. The brokerage highlighted weakened margins, driven by higher customs duties and a less favourable product mix, particularly the reduced share of studded jewellery. While management's commentary on demand was moderately positive, the lowered guidance for jewellery margins, driven by weak solitaire demand, was seen as a negative development. Jefferies consequently revised the company's earnings per share (EPS) down by 3-7 per cent.

Technical Insights

According to Om Mehra, technical analyst at SAMCO Securities, Titan's chart shows the formation of a triple top pattern, indicating bearish momentum. 

“The stock, which has dropped nearly 18 per cent from its 52-week high of ₹3,887, is trading near a critical support level of ₹3,100. Currently, Titan is consolidating at this level, and a move above ₹3,250 could spark a short-term rally. However, if the stock breaks below ₹3,100, it may decline further to ₹2,900-2,850,” said Mehra.

Ajit Mishra, SVP of Research, Religare Broking Ltd, highlighted that Titan's recent rebound from the 3,100 mark, which aligns with the 100-week exponential moving average (WEMA), signals the potential for further gains. The immediate upside target is between ₹3,350-3,450, presenting opportunities for traders to capitalise on the recovery while practising prudent risk management, he opined.

Axis Securities’ senior research analyst Aashish Shetty noted that Titan is nearing a key support zone between ₹3,050 and ₹3,100, representing a 50 per cent retracement from its February 2023 low. Buying interest has previously emerged at this level, he said, adding that should the stock close above ₹3,250, it could potentially climb to ₹3,500, with the next target being its previous high of ₹3,800.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, observed that Titan's structure has weakened after forming a double top pattern and retreating from ₹3,886. “Immediate resistance is at ₹3,450 (100-DMA), and a break above could push it toward ₹3,500. Conversely, ₹3,100 serves as a strong demand zone in case of further correction,” said Gour.

Gaurav Bissa, VP at InCred Equities, pointed out that while Titan has maintained an uptrend since 2020, it now shows signs of forming a double-top pattern, which could indicate a reversal. A weekly close below ₹3,055—the neckline of the pattern—might trigger a fall towards ₹2,800, he said. This aligns with Ichimoku analysis, where prices are below the "cloud," signalling the potential for further decline if key support levels fail, Bissa added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.