Titan shares faced a setback of nearly 3% after a downgrade by Morgan Stanley, attributing it to an anticipated slowdown in jewellery growth during the upcoming lean period. Morgan Stanley lowered its rating on stock to 'equal-weight' and set target price of Rs 3,207.
At present, the stock is trading at Rs 3,055.55, down by 2.81%, on the National Stock Exchange. Since the beginning of the year, Titan shares have delivered a return of 19%.
Morgan Stanley predicts sluggish growth in the July to September quarter due to the 'Adhik Mass' period in the Hindu calendar, traditionally considered inauspicious for jewellery purchases. The slow growth trend is expected to continue in the October to December quarter with the onset of another inauspicious season called 'Pitrupaksha' starting in September.
Additionally, Morgan Stanley anticipates that high gold prices will limit discretionary spending, resulting in decreased demand for gold. Although the foreign brokerage firm expects a temporary pause in the stock's outperformance, it continues to view Titan as an attractive long-term business.
Titan's latest quarterly update revealed a remarkable 22% growth in its jewellery business during the first quarter when compared to the same period last year. Caratlane, a subsidiary of Titan, experienced a 32% growth in Q1FY24. The watches and wearables segment, along with the eyecare segment, demonstrated a year-on-year growth of 13% and 10%, respectively, in Q1FY24.
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