Amid the ongoing weakness on Dalal Street, shares of Titan Company plunged nearly 17 per cent to Rs 2,098 in the afternoon trade on June 7. The scrip traded at Rs 2,524.35 on December 31 last year. On the other hand, the benchmark BSE Sensex declined over 5 per cent during the same period.
Data available with BSE showed that Rakesh Jhunjhunwala together with his wife held over 5 per cent stake in the company as of March 31, 2022. On the other hand, the country’s biggest institutional investor Life Insurance Corporation of India had a 3.15 per cent stake in Titan.
According to market watchers, sustained outflows by foreign institutional investors, geopolitical tensions and rising inflation concerns weighed market sentiment. Meanwhile, the company in May reported a 7.21 per cent fall in consolidated net profit at Rs 527 crore in the fourth quarter ended March 2022. It had posted a net profit of Rs 568 crore in the January-March quarter of FY21.
Its total income was up 4.25 per cent to Rs 7,872 crore during the period under review as against Rs 7,551 crore in the corresponding quarter last year. Titan’s revenue from sales of products or services was down 1.14 per cent to Rs 7,267 crore in the fourth quarter of FY22 as against Rs 7,351 crore a year ago.
ICICI Securities in a report said, “Revenue momentum for Titan’s jewellery division decelerated in Q4FY22 owing to Covid led disruptions and a sharp rise in gold prices in March leading to deferment of purchase by customers. Despite the same, the company outperformed other jewellery players and continued to gain market share. The management indicated that demand trends in April have been encouraging and are in line with the company’s targets.” Axis Capital last month upgraded the stock to ‘Reduce’ from a ‘Sell’ rating with a target price of Rs 2,050. The brokerage said that the recent correction has reduced Titan’s premium to its historical P/E band,” it said.
On the other hand, Centrum Broking in May gave Titan a ‘Buy’ rating with a target price of Rs 2,817. “Management showcased its ambition to achieve 2.5 times revenue growth over FY26 for Jewellery division, reaching 600 stores, covering 300 towns. Watches/Wearables division aims to achieve Rs 700/Rs300bn with an 18 per cent EBIT margin adding around 750 Multi-Brand retail outlets. Eye care division plans to achieve 50/40 per cent growth in revenues/EBIT reaching 1000 stores by FY23,” Centrum Broking said, adding though strong operating performance, Titan displayed many growth engines to achieve CAGR 20 per cent revenues for the next 5 years with stable margins.
“With solid earnings visibility in place, we recommend ‘Buy’ on Titan. However, irrational competition, prolonged recovery in the economy, and volatility in gold prices could be the major risks,” the brokerage said.
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