Titan’s reported numbers for June 2019 quarter met market expectations. The company’s sales (on standalone basis) was up 14.3 per cent for the April-June quarter, over the same period last year. Expenses shot up 15 per cent due to higher employee costs and interests. This impacted operating profit margins, which came at 10.8 per cent versus 11.3 per cent in the June quarter last year. Profit after tax was up 6.2 per cent Y-o-Y.

The stock shot up 2 per cent to a high of Rs 1,070 on the BSE immediately post the results. However, it lost its gains later and closed at Rs 1,038, up by Rs 1.25.

The jewellery segment, saw a growth of 13.3 per cent in the first quarter. The company’s management indicated that adverse prices and increase in customs duty on gold in the Budget impacted buying sentiments in jewellery.

The watches segment grew 20.4 per cent Y-o-Y. The company's eyewear business grew by 13.1 per cent.

Titan added (net) a total of 45 stores across businesses. The total number of stores as of June quarter was 1,640.

Caution

While those having a medium to long term investment horizon can buy the stock even at current levels given the strong brand and its dominant position in the market, others may tread with caution. With gold prices only to scale higher from here and stay up over the next few months on heightened geo-political tensions, demand may remain muted for the company’s jewellery business.

At the current market price of Rs 1,038, the stock discounts its trailing earnings of one year by 65 times. The three year average PE is 68 times.

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