Titan Extends Gains as Q4 Earnings Cheer Street

Titan shares jumped as much as 3.2 per cent to Rs 279.75 after its fourth-quarter results beats Street expectations.

Shares in Titan had rallied 3.5 per cent yesterday.

The jewellery and watch maker reported 11.3 per cent jump in its net profit at Rs 206 crore for the quarter ending March 2014, ahead of analyst estimates of Rs 175 crore.

Its ebitda (earning before interest, tax, depreciation and amortisation) margin improved to 10 per cent in the March quarter from 9.5 per cent a year earlier.

In spite of curbs on gold imports, its jewellery business grew 4 per cent in fourth quarter along with 7 per cent grammage (gram value of jewellery sold) growth.

Avinnash Gorakssakar, head of research at Miintdirect.com, says markets expected a dull quarter from the company but the company has surprised the Street given the fact that there were regulatory restrictions. The stock has potential to grow from here, he added.

Although its margin in the jewellery business declined 119 basis points year-on-year, higher growth in the watch business helped improve the overall margin.

In fiscal 2015, the company is planning to open 300 new stores totaling 3.5 lakh sq.ft.

Deutsche Bank maintains a buy on the stock with a target price of Rs 350 which translates to a valuation of 30 times its FY15 earning per share. The brokerage says all-round improvement in demand has led to this upgrade.

CLSA however maintains a sell on the stock with a target price of Rs 200 per share, citing that odds are not yet over for Titan. Goldman Sachs maintains neutral rating on the stock with a target price Rs 266 per share and increased its FY 15-17 estimated earnings per share by 3 per cent.

At 9.30 a.m., Titan shares were up 2.5 per cent compared to 0.13 per cent loss in Nifty.