JM Financial is bullish on Titan Company has recommended buy rating on the stock with a target price of Rs 965 in its research report dated September 17, 2018.
JM Financial's research report on Titan Company
We expect the Titan stock to remain volatile and mostly weak in the backdrop of the recent announcement by the government that it is looking at ways to curb import of ‘non-essential’ items. We do not expect RBI or the government to create disruptions of the kinds they did in 2013 (see Exhibits 1-2 for chronology of events, their impact on Titan’s stock price), which in hindsight did no material damage to Titan’s business-model but did severely impact stock performance in the interim. Ceteris parabus, any sharp fall in stock price on account of nervousness around government or RBI’s current account deficit control measures should be used as a buying opportunity - Titan’s intrinsic value would be impacted if and only if RBI’s restrictions (e.g. ban of gold on lease) stay till perpetuity; a temporary restriction for a year or two would not impact the intrinsic worth of Titan’s jewellery business, as per our workings. Additional import duty (10% currently), on the other hand, would simply be a pass-through and may affect buying sentiments for some time.
Outlook
The bigger factor to monitor, to us, would be how Titan’s growth outlook for FY19E and beyond unfolds - confidence of clocking 25% growth for the rest of FY19 seems to be ebbing in some way.
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