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On Friday, Citi analyst Ashish Kanodia adjusted the price target for Titan Company (TTAN:IN) stock, raising it to INR 3,800 from INR 3,550, while continuing to recommend a Neutral rating on the shares. Kanodia noted the company’s jewelry EBIT margin at 11.9%, which was slightly above Citi’s estimate of 11.5%. This performance was attributed to primary sales for international stores, a small element of hedging gain due to contango, and operating leverage.
Despite the positive margin performance, Citi’s stance remains cautious due to concerns about medium-term margins and profitability. The analyst cited several factors for this outlook, including increased competitive intensity, higher gold prices, and an adverse product mix. The lower sales of solitaire jewelry, which is affected by uncertainties around lab-grown diamonds (LGD), were particularly highlighted as a point of concern.
The management of Titan Company has projected a 15-20% year-over-year growth and an 11-11.5% margin for its jewelry segment by the fiscal year 2026. However, the aggressive expansion strategies by both existing and new players in the market are likely to increase the need for investment in branding and marketing. Additionally, there may be higher discounting, as indicated by Titan’s strategy of reducing its gold price premium over the last five years.
In response to these market dynamics, Citi has made marginal changes to its earnings per share (EPS) estimates for fiscal years 2026-2027, reducing them by 2%. The target multiple has been rolled forward to 55 times March 2027 earnings from December 2026 earnings.
Kanodia’s commentary concluded with the affirmation of the Neutral rating and the updated target price, reflecting a modest increase from the previous figure. The revised target price aims to capture the near-term strong growth outlook for Titan Company, which is seen as robust compared to other discretionary categories, while also accounting for the challenges that may affect the company’s profitability in the medium term.
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