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Titan is expected to report weak numbers for the June 2019 quarter on account of drop in demand following higher gold prices in the month of June.
In its pre-quarterly update submitted to the exchanges last month, the company had pointed out that it estimates 13 per cent growth in sales in the jewellery segment in the June quarter against the FY20 guidance of 22 per cent. This is despite sales during Akshaya Tritiya being robust. During the quarter 12 Tanishq stores were opened, with net retail space addition of 34,000 sq. ft.
In the watches division, there was a strong revenue growth of 19 per cent, supported by a large institutional order from Tata Consultancy Services. The division added 10 World of Titan (closed 8), 5 Fastrack (closed 2) and 6 Helios stores (closed 1) in Q1FY20. The eyewear division witnessed revenue growth of 13%, aided by the activation during the quarter.
Profit margins for the quarter are expected to be flat or slightly lower overall due to higher expenses on salaries, higher activations and dealer meet related expenses.
Based on the pre-quarterly update from the company, analysts expect a drop of 3-4 per cent in earnings for the company in 2019-20.
At the current market price of ₹1,039, the stock discounts its trailing earnings of one year by 65 times. The last three year average PE is 68 times.
The stock is down 17 per cent since last month after the per-quarterly update.
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