Analysts cut target prices for Titan Company Ltd. as profit of the nation's largest branded jewellery and watchmaker missed estimates in the quarter ended June amid high gold prices in the domestic market, overseas investments and wage settlements. Still, they maintained their bullish rating on the stock.
The company's net profit rose 6.2 percent year-on-year to Rs 371 crore in the April-June period, according to an exchange filing. That, however, is lower than the Rs 416-crore consensus estimate of analysts tracked by Bloomberg.
While growth of Titan's jewellery business—which generates over 80 percent of its revenue—moderated, its watches segment continued to perform better, partly aided an institutional order from Tata Consultancy Services Ltd.—a group company.
Here's what analysts have to say about Titan's first-quarter performance:
CLSA
- Maintains ‘Outperform' but cuts target price to Rs 1,150 from Rs 1,225 apiece.
- Miss in first quarter already priced in.
- Jewellery segment witnessed weak growth, modest margin.
- Better-than-expected margin in watches.
UBS
- Maintains ‘Buy' with a target price of Rs 1,600 apiece.
- Steady growth in tough environment.
- Management expects recovery in second half of ongoing financial year.
- Expects market share gains to continue.
BofAML
- Maintains ‘Buy' but cuts target price to Rs 1,320 from Rs 1,360 apiece.
- First quarter slightly below expectations but expects strong second half.
- Structural growth drivers intact.
- Cuts estimates by 2-3 percent to factor in near-term demand weakness.
CIMB
- Maintains ‘Add' and cuts target price to Rs 1,182 from Rs 1,210 apiece.
- Solid growth in a challenging macro environment.
- Sudden spike and volatility in gold prices hampered sales growth in first quarter.
- Expects sales growth to revive in second half; structural story of gaining market share remains intact.
Credit Suisse
- Maintains ‘Neutral' but cuts target price to Rs 1,050 from Rs 1,250 apiece.
- Jewellery slowdown continuing into second quarter, FY20 guidance likely to be missed.
- Margins not under pressure yet, but not sure of second half.
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