Titan falls 3% after Morgan Stanley downgrades stock on upcoming lean phase

Titan shares lost nearly 3 percent after Morgan Stanley downgraded the stock, citing a slowdown in jewellery growth because of a traditional lean period likely through the next couple of months.

Morgan Stanley downgraded the stock to ‘equal-weight’ with a target price of Rs 3,207.

The stock is trading 2.81 percent down at Rs 3,055.55 at 2.08pm on the National Stock Exchange. Titan shares have given 19 percent returns since January 1.

The foreign brokerage firm said that growth will be slow in the July to September quarter as it a period of ‘Adhik Mass’ in the Hindu calendar, which is considered an inauspicious time to purchase jewellery. The slow growth scenarios will continue in the October to December quarter as well, as another inauspicious season to buy jewellery, ‘Pitrupaksha’ will start from September.

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Morgan Stanley also sees high gold prices to curtail discretionary spending, lowering the demand for gold. The foreign broking firm expects a temporary pause in the outperformance of the Titan stock, however, continues to view Titan as an attractive business in the long term.

Titan in its quarterly update said that jewellery business grew 22 percent on-year in the first quarter. Titan’s Caratlane business grew 32 percent on-year in Q1FY24. Watches and wearables segment and the eyecare segment grew 13 and 10 percent respectively year-on-year in Q1FY24.

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