Titan rises over 2% as March quarter results meet Street estimates

Titan's net profit declined 1.5 per cent on a year-on-year (YoY) basis to Rs 343 crore as the Covid-19 pandemic adversely impacted operations during March

Shares of Titan Company rose as much as 2.7 per cent to Rs 1,047 on the BSE on Tuesday after the watch-to-jewellery maker posted largely in-line quarterly financial numbers although disruptions related to Covid-19 adversely impacted its top line and profit during this period.

In the quarter ended March 31, Titan's net profit declined 1.5 per cent on a year-on-year (YoY) basis to Rs 343 crore as the pandemic adversely impacted operations during March. Consolidated revenues of the firm declined around 4 per cent at Rs 4,753.2 crore YoY. According to the Bengaluru-headquartered firm, significant impact came in the second half of March 2020 due to the pandemic with the shutting down of stores.

The Tata group company said it could minimise impact of the pandemic due to aggressive cost-control measures. The company also said its stores across the country were receiving encouraging response as they open up under the relaxed norms.

“The company’s good performance across all divisions in the first two months of the quarter was negated considerably by the Covid-19 pandemic in the second half of March,” said CK Venkataraman, managing director (MD) at Titan.

“Our stores are now opening up with strict social distancing norms across the country and response from customers over the last few weeks have been very encouraging,” Venkataraman said.

During the quarter, business from jewellery division declined by 5.8 per cent at Rs 3,754 crore on a YoY basis. Similarly, the eyewear business saw a dip in revenues by 17.4 per cent at Rs 108 crore against Rs 130 crore in the same period last year. Earnings from watches division increased 4.9 per cent to Rs 557 crore.

For the whole fiscal year (FY20), net profit stood at Rs 1,492.66 crore compared to Rs 1,388.65 crore posted in FY19. Revenue at Rs 21,204.77 crore saw a growth of 6.2 per cent.

At 9:50 AM, the stock had pared all the gains and was trading 1.5 per cent lower at Rs 1,004.25. A total of 35.8 lakh shares have changed hands on the NSE and BSE, combined, so far.

JP Morgan maintained its 'neutral' stance on Titan with target price of Rs 1,020. "The Q4 in Titan was a margin-led earnings beat. Investor focus will now be on 'Strategic initiatives across biz'. Moreover, the company has opened its stores post easing of lockdown restrictions," it said.

Morgan Stanley, however, remained 'underweight' on Titan although the brokerage said the company's Q4 earnings were "better than expected", while adding that demand revival will be key for the stock.