Analysts Turn Cautious On Titan After Its Q2 Results
Titan has lowered guidance for its jewellery business for rest of 2019-20 due to weak consumer sentiment and high gold prices.
Analysts cut target price for Titan Company Ltd. after the nation’s largest branded jewellery maker lowered guidance of its mainstay business for the rest of the year owing to weak consumer sentiment and high gold prices.
Titan lowered its jewellery sales growth guidance to 11-13 percent for the second half of 2019-20 from 20 percent earlier, the company said in the post-earnings conference call. Higher gold prices detracted customers from buying ornaments, it said. “The combination of the poor public sentiment towards spending in general, aggravated by the levels price of gold, both contributed to lower purchases int he segment,” Managing Director CK Venkataraman told BloombergQuint.
Net profit of the owner of flagship Tanishq brand, too, lagged estimates in the quarter ended September. The bottom line rose 2 percent year-on-year to Rs 320 crore during the period. Net sales remained flat at Rs 4,435 crore.
Here’s what brokerages have to say after Titan Q2 Results 2019-20:
CLSA
- Downgrades to ‘sell’ from ‘underperform’ and cuts target price to Rs 1,025 from Rs 1,350 apiece.
- Second quarter net income sharply below estimates.
- Jewellery: weak growth and modest margins.
- Watches: modest growth, but EBIT declined.
UBS
- Maintains ‘buy’ but cuts target price to Rs 1,525 from Rs 1,600 apiece.
- Muted consumer sentiment and sharp inflation in gold prices hurt demand.
- Long-term drivers intact—poised to grow market share.
- Any stock price correction post second-quarter results are further opportunity to buy.
Credit Suisse
- Maintains ‘neutral’ with a target price of Rs 1,110 apiece.
- Subdued festive sales lead to substantial cut in FY20 guidance.
- Jewellery saw weak retail revenue growth despite high discounts.
- Festive season sales were a muted 10 percent.
- There are risks to even lowered expectations in rest of the financial year.
Jefferies
- Maintains ‘hold’ with a target price of Rs 1,100 apiece.
- Weak top line and operating margins delivery.
- Impacted by lower priced gold hedges maturing.
- Company saw lower offtakes from franchises.