Aug 29, 2013 05:38 PM IST | Source:

Buy Titan Industries; target Rs 250: is bullish on Titan Industries and has recommended buy rating on the stock with a target price of Rs 250 in its research report dated August 29, 2013.

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More's report on Titan Industries

"The management of Titan Industries has expressed concern over the recent changes and confirmed that it would need to resort to bank borrowings to fund working capital. This, in turn, will lead to higher costs (both financing and hedging) and, thereby, depress the return ratios. To deal with this, the company plans to a) stock more fast moving jewellery items, b) pass on increased costs to end users and c) de-risk its business model and launch new products in the lifestyle segment. As of now, Titan does not plan to alter its store addition plans unless gold availability becomes an issue. While the financial model of the company will be impacted owing to the regulatory changes, we believe Titan is relatively better placed as compared to its peers. In our opinion, the recent correction is overdone and we thereby upgrade Titan Industries to BUY with a reduced target price of Rs 250 (earlier Rs 300)."

"Even in the current regulatory framework, we believe Titan is better placed than its peers to deal with the current situation. We have reduced our earnings estimates downwards to factor in the changes (increased costs) and also downgraded the valuation multiple one notch to 23.0x FY15E EPS (owing to a compression in return ratios). However, in our opinion, the recent correction prices in the negatives. We, therefore, upgrade Titan Industries to BUY with a reduced target price of Rs 250," says research report.

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