Brokerages downgrade Titan stock post weak Q2 performance

Mumbai: Brokerages have maintained a bearish view on Titan and some have downgraded the stock citing weak EBIT margins in the second quarter and expensive valuations. The company on Wednesday reported a net profit of Rs 199 crore for the September quarter, down 37.81% from Rs 320 crore a year ago, while total income dropped 1.72% to Rs 4389 crore. The stock fell over 2% to Rs 1188 in afternoon trade on Thursday.

CLSA
Recommendation/Target Price: Maintained 'Sell', raised target price to Rs 1100 from Rs 931

• Risk reward is unfavourable with P/E at 61 times FY22 estimates
• Expect a progressive recovery with overall mix improvement
• Expect 15% sales and 12% earnings CAGR in FY20-FY23

Morgan Stanley
Recommendation/Target Price: Maintained 'Underweight' with Rs 980 target price

• Macro headwinds likely to push full fledged recovery beyond FY21
• Second quarter showed around 98% recovery in jewellery demand, albeit on a weak base
• Watches and eyewear recovery was slower vs jewellery

Jefferies
Recommendation/Target Price: Retain 'Hold' with Target Price of Rs 1150

• Cut EPS estimates for FY21-FY23 by 2-6%
• Forecast 11% annual growth in revenue over FY20-22E with flat EBITDA margins
• Retain rating as the stock is likely to be range-bound

Kotak Institutional Equities
Recommendation/Target Price: Downgrade to add from buy, revise target price to Rs 1325 from Rs 1270

• Cut FY21-FY23 EPS estimates by 2-6% to moderate profitability assumptions
• Downgraded the stock in view of the run up in stock price
• Remain constructive on stock in view of potential acceleration of market share gans as Titan remains stronger relative to competition in the post COVID world