Tata group stock falls 3% after brokerage expects weak Q4 revenue growth and margin concerns

‘The shares of the leading lifestyle company fell by 3 percent after the brokerage suggested weaker revenue growth momentum for Tanishq. 

Reason for Rise 

With a market capitalization of Rs 2.73 lakh crore, the shares of Titan Company Ltd closed at Rs 3,083.35 per share, decreasing around 2.54 percent as compared to the previous closing price of Rs 3,163.60 apiece. 

Matter Explanation 

The shares of Titan Company Ltd have seen bearish movement after the brokerage saw weaker revenue growth for Tanishq in February-March, putting Q4 growth estimates at risk. Expected cuts of 2-3 percent in FY26-27 estimates arise from 15-18 percent Q4 growth assumptions. Near-term revenue pressures and margin uncertainty make Titan’s 50x FY27E P/E valuation appear expensive. 

Jewellery Segment Insights 

Jewellery margins saw a boost from studded growth, but EBIT growth lagged. Ajoy Chawla noted that gold’s faster growth impacted Gross Contribution (GC) and EBIT margins. Management projects annualized jewellery EBIT margins between 11 percent and 11.5 percent, reflecting the shifting revenue mix and profitability dynamics. 

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Market Dynamics 

The rise in gold prices has diluted GC percentages for studded jewellery. Management aims to drive growth in both gold and studded segments despite price fluctuations. The focus remains on expanding the buyer base and enhancing same-store growth, both essential for long-term sustainability in a dynamic market. 

Future Outlook 

The management remains optimistic about sustaining growth through a strong market position, investments in customer relationships, and product innovation. Favourable long-term trends among affluent customers position Titan well in the jewellery market. Despite external challenges, the company remains committed to delivering exceptional value and driving continued growth. 

Margin Outlook 

Management has set an annualized margin threshold of 11 percent, deeming any drop below this level unacceptable under normal conditions. However, their primary focus is on growth over margins, aiming to maximize absolute profit and EBIT growth while maintaining profitability within the set margin limits.

Company Profile 

Titan Company Limited is an India-based consumer lifestyle company. The Company is primarily involved in the manufacturing and sale of Watches, Jewellery, Eyewear and other accessories and products. The Company’s segments include Watches and Wearables, Jewellery, Eyewear and Others. 

Written by Abhishek Singh

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