Titan Company gains 5%, hits new high ahead of June quarter results

Shares of Titan Company hit a new high of Rs 1,854.60 after they rallied 5 per cent on the BSE in the intra-day trade on Tuesday, ahead of the company's April-June quarter (Q1FY22) results on Wednesday, August 4. The stock of the Tata Group company surpassed its previous high of Rs 1,800, touched on June 25, 2021.

Titan saw good sales momentum during the first couple of weeks of Q1FY22. However, with the rising second wave of Covid-19, stores were gradually closed down by end-April with some unlocking in a few states in June, 2021.

Despite this, Titan Company highlighted that Q1FY22 saw good traction in new customers, recovery in the mix of buyers to pre-pandemic levels and growth in Golden Harvest enrolments year on year (YoY). Though the expansion got delayed due to lockdowns, Titan added 5 new stores with a space addition of ~20k sqft in Q1.

Titan Company had also said, in its quarterly business update, that it recorded revenue growth of around 117 per cent (excluding bullion sales) in Q1FY22, with revenue contribution of approximately 50 per cent, 10 per cent and 40 per cent coming from April, May and June months, respectively.

Analysts expect recovery to be faster relative to FY21 with 90 per cent stores already resuming operations and footfalls being higher than last year. The second Covid wave's impact and the phased implementation of Hallmarking are likely to further strengthen Titan’s franchise compared to peers and accelerate its growth ahead, they say.

"However, Q1 is expected to be weak due to lockdowns, and based on the above commentary, we forecast Titan to report 52 per cent sales growth (down ~60 per cent sequentially). We estimate Ebitda (earnings before interest, taxes, depreciation, and amortization) breakeven and a net loss of Rs 57.2 crore against a net loss of Rs 270 crore in Q1FY21," analysts at Emkay Global Financial Services said.

Brokerage firm Motilal Oswal Financial Services, meanwhile, believes that low gold prices over the past six months, pent-up wedding demand, continued tailwinds in favor of the organized players, and the absence of other spending options such as travel would result in a strong rebound in jewelry sales in subsequent quarters once stores open up, especially with the Covid cases declining rapidly and the pace of vaccinations picking up. "In view of the decent recovery in the quarter, we expect low single digit EBITDA margin. Watches and Eyewear divisions registered around 280 per cent and 117 per cent recovery, respectively in the quarter," the brokerage firm said in result preview.