Why investors lost over Rs 15,000 crore in Titan Company stock today
Titan Company share price logged the largest single-day fall in last 11 years today after the maker of Titan watches and Tanishq jewellery in its quarterly update said first quarter of the current fiscal saw a tough macro-economic environment with consumption taking a hit. The jewellery-to-watch maker said very high gold prices particularly in June also impacted growth in the jewellery industry. Titan Company shareholders lost over Rs 15,000 crore in investor wealth in trade today with its market capitalisation falling to Rs 96,058 crore today compared to Rs 1,11,208 crore yesterday on BSE.
Titan Company share price has been losing for the last four days and fallen 14.87% in the period. Titan Company share price opened at a loss of 6.15% at 1,175 level compared to the previous close of 1,252.65 on BSE.
The large cap stock touched an intraday low of Rs 1,088.05 , down 13.14% in early trade today.
Titan Company share price has gained 37.25% during the last one year and gained 21.31% since the beginning of this year. In comparison, the 30-share Sensex rose 7.5 % since the beginning of this year and 7.38% during the last one year.
It hit a 52-week high of Rs 1,340.75 in trade on July 1, 2019. The stock hit its 52 week low of 731.70 on October 9, 2018.
25 of 31 brokerages rate the stock "buy" or 'outperform', five "hold" and one "underperform", according to analysts' recommendations tracked by Reuters.
Ace investor Rakesh Jhunjhunwala held 5.72% stake or 5.07 crore shares in the firm at the end of March quarter. His wife Rekha Jhunjhunwala owned 1.32% or 1.16 crore shares of Titan Company during the period under consideration in the consumer durables firm.
The firm said revenue from jewellery grew by a muted 13% in Q1 of 2019 as sharp increase in gold prices dented consumer demand significantly in the month of June.
Wedding jewellery and studded group witnessed decent growth in the quarter. Sales on the auspicious occasion of 'Akshaya Tritiya' were robust.
Titan Company reported a 14.4% rise in its consolidated net profit for the quarter ended March 31.
The firm posted consolidated net profit of Rs 348.3 crore compared to Rs 304 crore in the same quarter last year. Total revenue rose 19.87% at Rs 4,945 crore compared to Rs 4,125 crore on a year ago basis.
The maker of Titan watches and Tanishq jewellery made provisions to the tune of Rs 46 crore for investments made as part of treasury operations in inter-corporate deposits in the IL&FS Group. Total income increased to Rs 4,945.06 crore for the quarter under review as compared to Rs 4,125.69 crore in the same period of 2017-18, Titan Company said.
For 2018-19 fiscal, the company posted a net profit of Rs 1,388.65 crore as against Rs 1,101.91 crore in 2017-18. Total income during the last fiscal rose to Rs 19,961.46 crore from Rs 16,244.81 crore in 2017-18.
After the Q4 earnings were announced on May 8, Motilal Oswal gave a target price of Rs 1310 on May 11 coupled with a buy call. On May 10 Friday, the stock price stood at 1131 level on BSE. In a report dated May 11, the brokerage said, "For a business that has (a) the best top-line growth visibility in the large-cap FMCG/retail space (20% compounded annual growth rate in jewellery, the largest segment, over the next four years);
(b) prospects of continued earnings before interest tax depreciation and amortisation (EBITDA) margins improvement because of high SSSG contribution and (c) sustained return on capital employed (ROCE) improvement from 26% in FY19E to 34% in FY19, Titan's high valuations are fully justified. In fact, increasing doubts over topline and earnings growth of many consumer peers should also ensure high multiples for Titan. Maintain Buy with target price of Rs 1,310 (targeting 50 times FY21E earnings per share)."
Titan Company is engaged in offering watches, jewellery and others. The company's segments include watches, jewellery, eyewear and others. The company offers plain and studded gold jewellery brands, such as Tanishq, GoldPlus, Zoya, Mia, which are retailed through Tanishq, GoldPlus, Zoya and Mia stores. The Company offers watches and accessories, such as bags, sunglasses in brands, including Titan, Sonata, Fastrack and sub brands, such as Raga, Xylys and Edge, among others.
Edited by Aseem Thapliyal