Profit booking in Titan shares after strong Q2 business update? Here’s what investors should do

Titan share price, Titan share price target: Titan Company shares succumbed to selling pressure amid market-wide weakness on Dalal Street, despite the company posting a strong business update for the second quarter of the financial year. The stock of Titan, a Tata group consumer lifestyle company whose popular brands include Tanishq, Mia, CaratLane, Fastrack, Sonata, Helios and Titan EyePlus, settled Rs 44.75 or 1.35 per cent lower at Rs 3,265 on NSE.  

Here's how the counter moved on Monday: 

Source: NSE

Some analysts suspected profit booking in the stock owing to the positive signals in the company’s quarterly update.  

In a regulatory filing released after market hours on Friday, the Tata group maker of jewellery and watches said its its revenue grew 20 per cent on a year-on-year basis in the quarter ended September 30 with 19 per cent domestic growth in its jewellery division, which includes its CaratLane and Tanishq brands. The overall growth was driven by studded activations, new collection launches, robust Golden Harvest sales, healthy weddings and high-value studded purchases, the Tata group company said.  

Titan said the domestic business of its watches and wearables (W&W) division registered growth of 32 per cent on a year-on-year basis, comprising 22 per cent growth in analog watches and 131 per cent growth in wearables.  

The company said its EyeCare division witnessed sales growth of 12 per cent in the July-September period. Among its emerging businesses, Titan registered sales growth of four per cent in its fragrances and fashion accessories unit.  

Sales growth in CaratLane came in at 45 per cent, led by equal growth in studded sales, new collections, gifting campaigns and ‘old gold’ exchange program initiatives during the quarter, the company said. The business added 13 new domestic stores in this period, expanding its network presence to 246 stores in 97 cities across the country, Titan added. 

Here’s how brokerages read the Tata group company’s Q2 business update:  

CLSA maintained an ‘outperform’ rating on Titan and raised its price target for the Tata group stock to Rs 3,540 from 3,270. The brokerage’s target implies an upside of almost seven per cent from Friday’s closing price.  

Macquarie ‘maintained’ an outperform rating on Titan and raised its target by Rs 100 to Rs 3,600. The brokerage expects strong demand in the company’s jewellery and watch segments to continue in the December quarter owing to the festive season. This week, India is set to enter the festive season, which typically leads to a pickup in consumer discretionary spends along with a rise in footfalls in shopping malls and other marketplaces.  

Morgan Stanley maintained an ‘equal-weight’ rating on the stock with a target of Rs 3,190. According to the brokerage, the trends witnessed in the Q2 business update were a positive surprise as it came despite the narrative of general sluggishness in discretionary demand and the impact of an extended inauspicious period.  

In addition, JP Morgan has maintained an overweight rating and has raised the target to Rs 3,450 from Rs 3,260 whereas Goldman Sachs has maintained a buy stance and has raised the target to Rs 3,425 from Rs 3,250.

Titan shares: Past performance

Titan's stock has given a positive return of over 20 per cent in the last 12 months (from October 20, 2022). In comparison, the headline index Nifty 50 has rallied nearly 14 per cent.

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