Titan Shares Fall On Morgan Stanley Downgrade Citing Longer Inauspicious Period
Morgan Stanley downgraded Titan Co. citing the longer-than-usual inauspicious period for buying in the Hindu calendar this year.
The research firm lowered the rating on the stock to 'equal-weight' and set a target price of Rs 3,207, implying a potential upside of about 5% from the current levels, according to a July 7 note.
Titan reported a strong sales in the first quarter, with 21% growth in jewellery on wedding demand in June despite gold price volatility.
Shifting Festive Season
The brokerage said the second quarter would see a slowdown in growth from July 18 to Aug. 16 Adhik Maas, an extra month in the Hindu calendar that is considered inauspicious for buying jewellery.
Also, the third quarter would account for a lower share of weddings with 'Pitru Paksha', the 16-day period to pay homage to ancestors, commencing on Sept. 29 and ending on Oct. 14., Morgan Stanley said. A delayed Diwali will also impact the number of wedding days in the December quarter.
According to the Hindu calendar, there are no auspicious wedding dates in the second quarter and only 12 in the December quarter.
Jewellery buying surges during the wedding season and Morgan Stanley expects the demand to recover from the third quarter ended December. But the financial services firm predicts an outperformance pause for Titan in the second and third quarters.
Impact Of High Gold Prices
Gold prices are close to record highs. That might hinder demand in the near term since they reinforce the premise that the yellow metal is a store of value, according to Morgan Stanley.
Shares of Titan were trading 2.3% lower at Rs 3,073 apiece as of 11 a.m., compared to a 0.5% advance in the NSE Nifty 50.
Of the 35 analysts tracking the stock, 27 maintain a 'buy', five recommend a 'hold' and three suggest a 'sell' rating, according to Bloomberg. The average of 12-month analyst price targets indicates a 1.7% downside.
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