Titan surges 2.5% on strong Q2 results; brokerages divided on upside

Titan Company's shares surged 2.5% on Friday following strong second-quarter results. The jewellery-to-watches conglomerate's Q2 earnings, declared on Thursday, saw the stock reach an intraday high of ₹5,003.90, up from ₹4,953.70 earlier in the day. The surge marked a 31% increase over the past year and a 22% rise year-to-date, outperforming the Nifty 50's negative returns during the same periods. At current levels, Titan trades at a P/E of 61 times, indicating a significant premium compared to the broader market.

Brokerages maintained generally bullish stances but differed in their upside expectations. Jefferies held a Buy rating with a target price of ₹6,000, citing a strong Q2 delivery despite gold price volatility and a shift in the festive calendar. Citi upgraded its target to ₹5,875 from ₹5,700, also maintaining a Buy rating, praising the company's domestic jewellery EBIT margin of 11.7%, which is 60 basis points above Citi's estimate.

Motilal Oswal retained a Buy rating, targeting ₹5,700 and projecting a 15% revenue CAGR and 24% PAT CAGR through FY28. JM Financial, however, downgraded Titan to ADD, maintaining its target at ₹5,150, expressing concerns over flat buyer growth in the second half. JPMorgan held a Neutral stance with a target price of ₹5,540, noting that earnings missed estimates due to higher finance costs, while the company's operating performance exceeded expectations.

Titan's Q2FY27 consolidated total income rose 25% year-on-year to ₹20,533 crore. Jewellery revenue, excluding bullion, grew 22% to ₹17,495 crore. EBITDA increased 62% to ₹2,626 crore, and PAT jumped 56% to ₹1,572 crore, partly due to a one-time customs duty gain of ₹536 crore. Watches revenue grew 27% to ₹1,881 crore, and EyeCare expanded 28% to ₹281 crore.

Management reiterated its FY27 jewellery EBIT margin guidance at around 11%, indicating that they would reinvest margin gains to drive buyer growth rather than focusing on immediate profitability.