Titan shares fell over 10% in early trade
Titan shares fell over 10% in early trade

Titan shares tank after company says jewellery demand hit by high gold prices

  • High gold prices hit jewellery demand, Titan said
  • Q1 growth in the jewellery segment was lower than planned, the company said

NEW DELHI: Shares of Titan Company Ltd on Tuesday slumped nearly 13%, its steepest fall in six years, after the company reported subdued revenue growth for the April-June quarter on the back of tough macroeconomic environment and weak consumption trend.

So far today, the stock has touched a low of 1,091.10 on BSE, down 12.9%, its biggest slide since June 2013. At 10.13 am, the scrip traded at 1091.40. The stock was down for the fourth consecutive session today, having declined 18% during the period. So far this year, the stock has risen 20%.

Revenue grew a muted 13% in June quarter as sharp increases in gold prices hit consumer demand last month. Analysts expected a 25% year-on-year growth in the first quarter of fiscal 2019-20.

In June, global gold prices rose 8% month-on-month which analysts believe hurt consumer demand for the precious metal.

Brokerage firm Reliance Securities has lowered its estimate for Titan Company’s fiscal 2020 revenue by 3.3% and that of FY21 by 5.6%, given the general economic slowdown. The brokerage firm estimates the company’s total revenue to grow 15.6% year-on-year in FY20 to 22,000 crore, and expects 15.8% growth in FY21 to 25,500 crore. EBITDA growth and net profit estimates have also been lowered by 3.9% for FY20 and 6.5% for FY21.

"Current economic slowdown is likely to impact the quarterly run-rates. However, Titan is likely to return the higher growth path once the consumer spending picks up in the economy. Hence, we continue to value Titan at 50 times based on FY21 estimates EPS and re-iterate HOLD rating," Reliance Securities said in an 8 July report. The brokerage firm has revised its target price on Titan’s stock to 1,221 from 1,304, and cut its earning per share estimate by 3.9% to 20.4 for fiscal 2020, and 6.3% to 24.4 for FY21.

The company said its watches division reported revenue growth of 19%, partly aided by execution of a large institutional order from Tata Consultancy Services while eye-wear segment witnessed revenue growth of 13%, aided by activation during the quarter.

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