Weak Performance by Titan not to be a Cause of Concern for Investors

contributes over 85 percent of the company’s profits and any weak performance on this front is damaging for the stock price movement. In addition to slower growth, high expenses and fluctuation in gold prices, too, impacted revenue which declined 2 percent year-on-year. This has resulted in the stock losing 5 percent on Wednesday morning.

But there are chances that these costs could be reversed. According to analysts, the chances of hedging cost getting reversed was higher in the coming quarters, leading to higher revenue growth. According to the data shared by the company, the muted demand for June and July is a distant memory as sales growth for August and September jumped back to 15 percent. It is expected to be higher in the second half of FY20 due to the upcoming festive season and a higher number of weddings taking place during this period. Moreover, any change in the stock price should be seen as an opportunity to enter as demand for the stock is expected to remain high. No large-cap company including Nestle, HUL, and Britannia in the FMCG / retail space is offering growth visibility as high as Titan.

Analysts expect a 20 percent CAGR for the next two years and higher operating profit margins resulting from same-store sales growth. Profit growth of over 20 percent is highest in the large-cap consumer space. But in spite of this Titan’s 12-month forward P/E multiple is the same as the average of the top five consumer players.