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Last Updated : Aug 07, 2019 11:34 AM IST | Source: Moneycontrol.com

Titan hits 6-month low as global brokerages cut target price after Q1 nos

While staying neutral on the stock, Credit Suisse also slashed price target Rs 1,050 from Rs 1,250 after cutting FY20/21 earnings estimates by 7/9 percent

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Shares of Titan Company fell below Rs 1,000 mark intraday and hit a fresh 6-month low on August 7 as global brokerages slashed price target on demand worries after Q1 earnings.

The stock was quoting at Rs 1,011.60, down Rs 26.45, or 2.55 percent on the BSE at 1025 hours IST.

The jewellery-to-eye wear maker met analyst expectations on August 6 by reporting 6.1 percent year-on-year growth in June quarter profit at Rs 370.3 crore on revenue of Rs 4,939.7 crore that increased 14.4 percent driven by 13 percent primary growth in both jewellery & eyewear. EBITDA grew by 14.1 percent year-on-year to Rs 565.3 crore but margin contracted by 10bps YoY to 11.4 percent in Q1.

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Macquarie said it continued to like the long-term market share gain thesis of Tanishq, but maintained a neutral rating on the stock and cut price target to Rs 1,078 from Rs 1,294 per share as near-term demand could be hit on high gold prices.

Overall macro slowdown will continue to put pressure on sales growth and near-term demand remains muted in jewellery, it added.

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While staying neutral on the stock, Credit Suisse also slashed price target Rs 1,050 from Rs 1,250 after cutting FY20/21 earnings estimates by 7/9 percent.

"Q1 earnings were largely in-line with lowered expectations. Jewellery revenue grew by 13 percent, lower than over 20 percent growth guidance. The slowdown started in June after a spike in gold prices. Company is hopeful to drive second half of FY20 via innovations as demand environment is weak," the global brokerage said.

Bank of America Merrill Lynch also cut its price target to Rs 1,320 from Rs 1,360 after trimming earnings estimates by 2-3 percent to bake in near-term demand weakness, though it maintained its bullish stance on the stock.

"Structure growth drivers are intact. Q1 was slightly below expectations but company sees strong second half of FY20," it said.

CLSA is another global brokerage firm that slashed price target on Titan to Rs 1,150 from Rs 1,225 per share, though it maintained positive stance on the stock.

"Miss in Q1FY20 already priced in the pre-quarter release as the impact of a sharp gold price rise & weak macro are visible in company's jewellery. Volatility seemed high during the quarter," said the brokerage which cut EPS estimates by 2 percent for FY20.

Among others, Citi maintained its buy call on the stock with a target price at Rs 1,175. "There were no surprises in Q1 results post management update released in early July. It is prudent to wait and watch how growth trends move in the coming months. We remain positive on long-term growth prospects," it said.

Kotak Institutional Equities has retained its reduce call on the stock with a price target at Rs 1,000 per share as jewellery demand is still weak, but the company is confident of a sharp pick-up soon.

"FY20 revenue & EPS estimates reduced by 3 percent and 8 percent, respectively," it said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Aug 7, 2019 11:34 am
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