JP Morgan puts "underweight" on Titan Industries
JP Morgan maintains `Underweight' rating on Titan Industries.
By ET Bureau |
TITAN INDUSTRIES
RESEARCH: JP MORGAN
RATING: UNDERWEIGHT
CMP: RS 1238
JP Morgan maintains `Underweight' rating on Titan Industries. High gold prices keep consumers on sidelines as they refrain from fresh purchases. Price resistance remains high despite gold prices being stable for the past five months and it appears consumers may take more time to adjust to these levels.
Volume decline (y-o-y) is likely in Q2FY10 and management is hopeful that the festival season (October-November) may see demand revival. Weak sales growth and high lease rates will keep margins under pressure. The watch exchange promotional offer has seen good response so far. However, the management maintained that it would be important to watch the demand trends in coming months to assess the sustainability of this growth.
For jewellery, the focus shifts to large format Tanishq stores with better profitability metrics. Eye+ format is to add 15-20 new stores in FY10. JP Morgan expects weak Q2FY10 driven by volume drop (in jewellery) and margin decline on a high base.
RESEARCH: JP MORGAN
RATING: UNDERWEIGHT
CMP: RS 1238
JP Morgan maintains `Underweight' rating on Titan Industries. High gold prices keep consumers on sidelines as they refrain from fresh purchases. Price resistance remains high despite gold prices being stable for the past five months and it appears consumers may take more time to adjust to these levels.
Volume decline (y-o-y) is likely in Q2FY10 and management is hopeful that the festival season (October-November) may see demand revival. Weak sales growth and high lease rates will keep margins under pressure. The watch exchange promotional offer has seen good response so far. However, the management maintained that it would be important to watch the demand trends in coming months to assess the sustainability of this growth.
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For jewellery, the focus shifts to large format Tanishq stores with better profitability metrics. Eye+ format is to add 15-20 new stores in FY10. JP Morgan expects weak Q2FY10 driven by volume drop (in jewellery) and margin decline on a high base.
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