A Titan stumbles, and the Street adds to its pain

Shares of watch-to-jewellery maker Titan Company hit a sixmonth low on Wednesday as its June quarter result missed estimates and brokerages cut target price on the stock following the result due to concerns on demand.

Technical analysts see the stock staging a bounce back as it has fallen 18 per cent in the last one month, but the rebound is not seen sustaining because of rich valuations.

“The stock has support at Rs 950-960 levels at which it can be bought for a upside of Rs 70- 80 in the short term, said Nagaraj Shetti, technical research analyst at HDFC Securities.


The stock fell 3.8 per cent to a six-month low of 998.7 during the session on Wednesday but it recovered most losses to end 0.8 per cent lower at Rs 1,029.50 on Wednesday. Titan reported a 6 per cent year-on-year growth in standalone net profit at Rs 371 crore in the June quarter which was lower than consensus estimates. Standalone total income rose 14.7 per cent to Rs 4995.64 crore.

Chartered Market Technician Abhishek Karande said there may be a temporary bounce back in the stock till Rs 1,100 as it is oversold. However, this may not be a trend reversal, said Karande. He pegs support level for the stock at Rs 990.

The stock has been one of the most favoured bets of ace investor Rakesh Jhunjhunwala. The investor himself increased stake in the company in the June quarter. Jhunjhunwala and his wife Rekha held 7.05 per cent stake in Titan at the end of June, marginally higher compared to 7.04 per cent stake a quarter ago. However, a weak performance in the jewellery business in the June quarter and rise in import duty on gold from 10 per cent to 12 per cent in the budget has been weighing on the stock. Titan’s jewellery business grew 13.3 per cent in June quarter, hurt by a general slowdown and a 3.9 per cent jump in gold price. The company has guided for 20 per cent growth in the second half of FY20.

“Titan is likely to be the biggest beneficiary of the shift to organised trade. While FY20 estimate would be impacted due to softening demand, we expect the impact to taper off in FY21 given the discretionary nature of the category,” said CIMB Securities.