Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Mark-to-market/  Titan’s pre-quarterly update for Q3 brings cheer for investors
BackBack

Titan’s pre-quarterly update for Q3 brings cheer for investors

Titan expects full-year growth in Tanishq, its jewellery business, to be around 22%. This assumes 29% sales growth in second half of 2018-19

Even as Titan’s shares have appreciated from their October low, they have still marginally underperformed the broader market so far this year. Graphic: MintPremium
Even as Titan’s shares have appreciated from their October low, they have still marginally underperformed the broader market so far this year. Graphic: Mint

Titan Co. Ltd’s pre-quarterly update for the December quarter brought cheers for investors. The company said there was good growth momentum across all its businesses in the seasonally strong third quarter. On a day when broader markets were upbeat, Titan shares touched a high of 964 on Monday during market hours, up 3.8% over Friday’s closing price.

The company said it expects the full-year growth in its jewellery business to be around 22%. This assumes 29% sales growth in the second half of 2018-19.

This is good news considering that the performance of Titan’s mainstay jewellery business hasn’t been particularly impressive for the first two quarters of FY19. During the June quarter, jewellery growth was slow on a high base and fell short of the management’s internal targets. In the September quarter, the business margins had contracted. For the half-year ended September, jewellery revenue increased by about 16% over the same period last year.

To be sure, management comments regarding this year’s festival season were upbeat during its September quarter earnings call. “The Dussehra, Diwali season performance has been very-very encouraging, we are in the (+25%) growth rate in this 30-day period," Titan had said during its second quarter call. In that sense, its update on the December quarter may not come as a big surprise for investors. Nonetheless, it does instil some confidence.

On the flip side, outlook on the watch business is not as rosy. “With significantly higher spends on advertising, the EBIT margins in the watches segment will be substantially subdued in Q3," says the company. Ebit is earnings before interest and tax.

Eventually, the Titan stock closed 1.7% higher on Monday at 944. So far in FY19, it has marginally underperformed the Nifty 500 index by 1.7%. Valuations are on the higher side with the stock trading at 46 times estimated earnings for FY20, shows Bloomberg data.

Titan is expected to be a key beneficiary of the shift to the organized market. But the stock’s high valuation suggests a good portion of the optimism is baked into the price.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Pallavi Pengonda
Pallavi is a deputy editor at Mint and heads the Mark to Market team. This column covers wide-ranging topics related to the stock markets, offering an in-depth analysis of financial reports of companies. She writes and edits across verticals, covering the breadth of the Indian stock market. Pallavi has done her master of management studies, specializing in finance.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 08 Jan 2019, 02:47 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App