Titan Company surges 6%, hits record high; market-cap nears Rs 1.5 trillion

Shares of Titan Company hit a record high of Rs 1,679.60 after they rallied 6 per cent on the BSE in intra-day trade on Thursday amid the expectation of a strong recovery, due to pent up demand and market share gains.

The stock of Tata Group Company surpassed its previous high of Rs 1,620.95, touched on January 6, 2021. With today’s rally, it has recovered 20 per cent from its recent low of Rs 1,401, hit on May 4 in intra-day trade.

With a sharp surge in the market price of Titan Company, its market capitalisation stands close to the Rs 1.5 trillion mark. At 11:42 am, the stock was up 5.5 per cent at Rs 1,672, with a market capitalisation of Rs 1.48 trillion, the BSE data shows.

Titan Company manufactures and retails jewellery and watches. It also produces perfume for men and women.

Ace investor Rakesh Jhunjhunwala (3.97 per cent stake) and his wife Rekha Jhunjhunwala (1.09 per cent) collectively held 5.06 per cent stake in Titan Company at the end of the March 2021 quarter, the shareholding pattern data shows.

On April 29, Titan reported robust sales growth of 61 per cent year-on-year (YoY) in the January-March quarter (Q4FY21) but the operating performance was below Street estimates on lower Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins (down 250 basis points) due to a steep fall in gross margin. The company attributed the margin miss to a weak revenue mix, higher coins & B2B sales in jewellery and the impact of custom duty reduction.

Analysts at Geojit Financial Services believe that the company’s ongoing initiatives to contain cost, manage cash and improve market share (policies rolled out in a more systematic manner this time as compared to last year) should lead to better margins and support healthy performance.

“Unlike other discretionary peers, Titan can claw back some of this lost demand. This is because the underlying demand remains robust, led by a decline in gold prices and strong wedding jewellery demand. Despite around 62 per cent YoY sales decline in Q1, it ended up reporting positive sales growth in FY21,” analysts at Motilal Oswal Securities said in result update.

“We expect slow expansion in jewellery margins given the focus on growth and market share gain. Titan is going to benefit from growth in adjacent business divisions such as turnaround in eyewear business with around 18 per cent EBIT (earnings before interest tax) margins in 2HFY21, full recovery in watch division and scalability of Taneira,” according to analysts at Prabhudas Lilladher.