Nomura downgrades Titan to Neutral on gold price fall

Nomura has downgraded Titan Industries to a 'Neutral' rating following a fall in gold prices amidst  uncertain demand environment.

The brokerage has slashed its price target on the company by almost a fourth to Rs 250 from Rs 321.

The jewellery retailer is currently trading at a price to earning multiple of 21.7 times its FY15 earnings compared to a sector average of 24 times.

Nomura expects the company to clock earnings growth of about 15% over the next couple years, 300 basis points lower than the sector average of 18%.

The Japanese firm believes any further drop in gold prices will be a negative for the company.

“We factor in a lower valuation multiple of 22 times to account for the potential slower growth. Uncertainty around both gold prices and the demand environment means the stock price is likely to remain range-bound in the near-term and trade at lower than long-term multiples,” said Nomura analyst duo Manish Jain and Anup Sudhendranath in a research report.

Shares of Titan were last trading 5% higher at Rs 272.75 on BSE at 11.45 pm.