Titan Company has been trembling on Dalal Street after PM Narendra Modi banned usage of Rs 500 and Rs 1000 on November 8. The share, already reeling under Tata Group boardroom saga post Cyrus Mistry ouster, lost 12 percent from November 8 to December 1 due to demonetisation. However, maverick investor Rakesh Jhunjhunwala is unperturbed.
In a conference call with management, Jhunjhunwala said that demonetisation is positive for Tanishq (Titan’s retail jewellery brand) in the longer run and hence expects consumer behaviour to return to normal soon.
Both Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala jointly hold 8.13 percent stake in Titan Company as on September 30.
Meanwhile, the management of Titan Company is itself worried about its business. In the concall, Titan said that Q3 and Q4 will be a bit suppressed. The management also said that its ability to invest in marketing will be impacted and is seeing 20-30 percent hit on channel flows. On a positive note, the management is confident about FY18 and thereafter.
Appreciating government’s clarification quelling rumours surrounding gold, management said the move will push people who earlier bought from the unorganised market to Titan’s Tanishq brand.
The centre has clarified that there is no limit on any gold holding provided it is acquired from explained sources of income including inheritance.
Citing a circular issued 22 years ago, the central board of direct taxes said married women can hold 500 grams of gold even if it does not seem to be matching with their income records. However, this limit is just 250 grams for unmarried women and 100 grams for men.
According to a Care Ratings gems and jewellery sector is likely to be impacted at least in the medium-term. However, it added that though export market and large diamantaires in the organised sector may not be impacted much.
After a subdued demand scenario for exports of cut and polished diamonds (CPD) from India during large part of FY15 and FY16, which had also resulted in pressure on profitability margins in the industry, some signs of revival in demand have been witnessed during first half of FY17, it said.
Shares of Titan Company fell 2 percent intraday on Friday. At 12:36 hrs Titan Company was quoting at Rs 320.20, down Rs 3.65, or 1.13 percent on the BSE.
Posted by Nasrin Sultana