Mumbai: Shares of Titan Co. Ltd on Wednesday jumped as much as 9.6%, its maximum gain in 32 months, after the company reported better-than-expected earnings for the December quarter on strong festive and wedding season sales.

The stock touched a high of Rs431 a share and gained as much as 9.55%, its biggest gain since 22 May 2014. At 9.57am, the scrip was trading at Rs427.95 on the BSE, up 8.8% from its previous close, while India’s benchmark Sensex index fell 0.01% to 28,335.74 points.

The Titan Co. Ltd shares closed up 8.07% at 425.15 on Wednesday.

Net profit rose 13.1% to Rs255.75, while revenue gained 14.4% to Rs3,925.95. Both net profit and revenue beat estimates of Rs244.20 crore and Rs3,675.10 crore, respectively, in a Bloomberg analysts’ survey. Its jewellery business grew 15.4%, while revenue for the watches segment climbed 5.1%.

Rivals PC Jeweller Ltd gained 2.7%, Gitanjali Gems Ltd rose 2.5%, and Tribhovandas Bhimji Zaveri Ltd rose 2.6%.

“We believe the business model of many smaller jewellers is under pressure post demonetisation, multiple regulatory changes, and curbs on large cash transactions. This has allowed Titan to gain market shares from smaller players. We expect the company to continue to gain market shares post roll out of GST," said ICICI Securities in a note to its investors.

The company has, since, repeatedly said it expects demonetisation to give its jewellery business a boost as customers migrate from the large informal space, which most consumers traditionally tap for their jewellery purchase, to the organized segment of the market.

ICICI Securities believes that the jewellery industry will see a tectonic shift from unorganized to organized over the next five years, and being the market leader among organized players Titan will be a key beneficiary. Near-term performance will be supported by festive and wedding demand; also, low base of the fourth quarter of fiscal year 2016 with one month’s sales loss will be supportive.

Earnings before interest, tax, depreciation and amortisation (Ebitda) grew 25.5% from a year ago to Rs350 crore against the estimates of Rs310 crore while Ebitda margin expanded 80 basis points to 9.1%.

Eyewear segment posted a growth of 12% year-on-year, while other segments (precision engineering, accessories and others) posted 44% growth in revenues. PED (precision engineering division) business clocked a robust growth of 47%.

“We believe the demonetisation impact has been lower than expected; however, visibility of strong share gains from unorganized and double-digit growth sustaining in the coming quarters remains weak due to low consumer spends. Factoring better performance, lower impact of demonetisation and better cost control, we increase FY17-19 earnings by 5-8%," said SBI Cap Securities in a research report.

Broking firm CLSA has raised the stock to “buy" rating from “underperform", while ICICI Securities has maintained its “buy" rating on the stock.

Of the analysts covering the stock, 14 have a “buy" rating, 11 have a “hold" rating, while eight have a “sell" rating, shows Bloomberg data.

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