Titan share price drops despite strong Q2 business update. Should you buy the Tata group stock?

Titan share price traded over 2% lower on Monday despite the company reported strong business performance for the quarter ended September 2024, exceeding analysts’ expectations. Titan shares opened 2.36% higher at a high of ₹3,750.00 apiece on BSE, but soon gave up gains on profit booking and were trading over 2% lower.

The Tata group firm, Titan Company, reported 25% year-on-year (YoY) growth in Q2FY25 led by higher than expected growth across most business segments. The company added a total of 75 stores (net) during the quarter expanding its combined retail network presence to 3,171 stores.

Jewellery domestic operations grew 25% YoY in Q2 after a relatively soft Q1. The non-solitaire studded segment recorded growth in high double-digits whereas the solitaire segment saw a decline amidst price uncertainty and demand supply dynamics in the international markets, both together resulting in overall studded sales growth in low double-digits for the quarter, Titan Company said in its Q1 business update.

Watches & Wearables domestic business grew 19% YoY. Revenue growth in Analog was around 25% YoY well supported by both volume and value growths. EyeCare’s domestic business grew 6% YoY, while in Emerging Businesses, Taneira's revenue grew 11% YoY.

“As per its Q2 business update, Titan has exceeded our growth expectations across most business segments. Importantly, jewellery has reported a significant improvement with 26% growth in Q2 vs our 15% expectation and 9% growth in Q1. LTL growth has also inched upwards to the mid-teens vs 3% in Q1, likely triggered by a big 900 bps duty cut. Revenue mix is likely a tad weaker with low-double-digits growth in the high-margin studded segment (vs ~25% overall growth),” said Devanshu Bansal, Research Analyst at Emkay Global Financial Services.

However, he believes Titan is comfortably placed to meet its ~12% jewellery EBIT margin guidance in FY25.

“Q2 outperformance should address investor concerns around potential moderation in growth for Titan and drive a 4-5% increase in our earnings estimates,” he added.

Emkay Global recommended a ‘Buy’ rating on Titan shares with a revised target price of ₹4,400 per share.

Titan Stock Price

Titan stock price has remained muted recently, falling over 6% in one week and over 3% in one month. Titan shares have risen more than 9% in three months, but have fallen a little over 2% year-to-date (YTD). In the past one year period, Titan stock price has gained over 8%.

On the technical front, Titan stock is finding support at its 200-day moving average (DMA).

“Titan stock has corrected from its classical double top formation at ₹3,800 - 3,820 levels. The stock is testing support at its 200 DMA at ₹3,558 level. It has a strong support range of ₹3,475 - ₹3,550,” said Milan Vaishnav, founder of ChartWizard FZE and Gemstone Equity Research.

Vaishnav recommends traders not to take any fresh positions in Titan shares and suggests investors holding Titan shares to stay invested.

“Investors in Titan shares are advised to remain invested and keep a stop loss above ₹3,475 level. If the stock breaches the support strong level, investors can exit the stock,” Vaishnav said.

At 10:00 am, Titan shares were trading 2.11% lower at ₹3,586.00 apiece on the BSE.

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 making any investment decisions.