Titan Company shares trade higher for the second day in a row, rising 3 percent in intraday trading on Wednesday to 1,614 rupees on the BSE. The stock is up 6 percent in the past two days in a market that has been moving. In comparison, the S&P BSE Sensex at 10:05 a.m. was 0.27 percent higher at 50,775 points.
On April 29, Titan posted robust year-over-year revenue growth of 61 percent for the January-March quarter (Q4FY21), but operating performance was below Street estimates due to lower Ebitda (earnings before interest, taxes, depreciation, and amortization) . Margins (minus 250 basis points) due to a sharp drop in gross margin. The company attributed the margin loss to a weak revenue mix, higher coin and B2B jewelry sales, and the impact of the tariff cut.
The strong profit run rate in the second half of fiscal year 21 provides an overview of the likely recovery in earnings in fiscal year 22 when fully unlocked. Titan remains our preferred choice in terms of discretion and offers faster growth prospects, the brokerage firm said in the earnings update. The buy rating for the stock with a price target of Rs 1,725 per share is retained.
“While there is a volatile demand scenario in the short term, we believe titanium is a structural growth story and appears to be a major beneficiary of the disorganized to organized shift in the Indian jewelry market. The focus on gaining market share and maintaining B / S strength (RoCE: 30 percent plus) positions titanium as our preferred choice in the discretionary category, ”said ICICI Securities in its earnings update for the fourth quarter of fiscal year 21.