Titan‘s share price was down in the red on Wednesday morning as the company’s September-quarter results disappointed investors and brokerages. The stock went down around 3% to hit an intraday low of ₹3,120.50.

What Happened: Titan reported a standalone net profit of ₹705 crore for the September quarter, down 25% from ₹940 crore in the same period last year, falling short of analyst estimates. The company attributed the decline in profit to the impact of reductions in custom duty

Revenue from operations rose 13.3% year-on-year to ₹13,215 crore, compared with ₹11,660 crore in the same quarter a year ago. Analysts had anticipated revenue of ₹13,217 crore and net profit of ₹1,015 crore.

What Are Brokerages Saying? Brokerages shared mixed views on Titan’s Q2 performance, noting strong topline growth but expressing concerns about revised margin guidance.

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Jefferies maintained a “hold” rating, reducing its target price to ₹3,400 from ₹3,600. The analysts describe Q2 as an expectedly weak outcome, with jewellery growth boosted by the customs duty cut but negatively affecting margins due to a weaker studded mix. It viewed the guidance cut negatively, especially given the subdued demand for solitaires.

Investec also maintained a “hold” rating, lowering the target price to ₹3,822 from ₹4,100. They highlight that jewellery margins missed expectations despite factoring in customs duty impacts. The competitive pressure and weaker product mix raised concerns that margin challenges could continue into FY26.

Dolat Capital downgraded Titan to a “sell” with a target price of ₹3,005. The analysts highlighted that while jewellery sales grew by 25.5% year on year (ex-bullion) due to increased gold purchases after the customs duty reduction, margins were impacted by a one-time charge of ₹290 crore and a lower studded jewellery mix. Going forward, the brokerage expects the margins to remain pressured due to intensified discounting and competition.

HDFC Securities reiterated its “reduce” rating with a revised price target of ₹2,950. The brokerage said that the jeweller’s margins fell short of its expectations, with consolidated jewellery EBIT margins contracting by 486 basis points year on year to 8.3% after adjusting for a ₹290 crore customs duty impact.

Morgan Stanley said that while topline growth was strong, margins were a big negative surprise. The brokerage highlighted that buyer growth benefitted from the duty cut, and H2 demand is expected to be strong, though FY25 jewellery EBIT margin guidance was cut to 11-11.5%. The global brokerage maintained its “equal weight” rating for the stock with a price target of ₹3,532.

On the other hand, Goldman Sachs maintained a “buy” rating, lowering the target price to ₹3,650 from ₹3,750 due to revised margin guidance.

Despite strong growth in jewellery sales, the studied mix dropped slightly, and jewellery margin guidance was cut by around 100 basis points for FY25. The analysts also noted that lab-grown diamonds have had no significant impact on Titan's business.

Price Action: Titan’s share price was down 3.36% to trade at ₹3,121.75 as the markets opened on Wednesday.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.