Titan extends decline amid weak Q4 margins – check what brokerages have to say

The jewellery heavyweight, Titan declined by over one per cent intraday today on the back of weak margins in the March-ended quarter earnings. Despite missing the street’s expectations, the Tata Group company’ not profit jumped by 48 per cent in the Q4 results for the financial year 2020-2021. 

The operating margin of the jewellery company stood this quarter at 10.9 per cent as compared to 13 per cent year-on-year basis. The contraction stemmed from pressure on the jewellery division's margins. 

The company reported net profit growth by 49 per cent to Rs 529 crore versus Rs 357 crore year-on-year basis. Whereas, the topline stood at Rs 7,135 crores, up 61 per cent in the quarter four of FY21. 

The shares of the company opened Rs 4 higher than the previous day’s close at Rs 1510 per share. The stock touched day’s low at around Rs 1471 per share, currently trading below Rs 1500 apiece level. 

In this regard, Jefferies maintains HOLD call on Titan, predicting the shares of the company may fall to Rs 1,450 per share. The brokerage firm states that the Jewellery business led to revenue and profit growth, Titan’s jewellery business gained market share while other businesses were mixed.  

Mentioning that pandemic clouds the near-term outlook, Jefferies expect a volatile trend and FY22 looks particularly tough. 

Meanwhile, Citi retains Neutral call on Titan, expecting the share price of the company to grow Rs 1,660 apiece. It points out, Q4 margin missed and downside risks due to fresh covid restrictions. The valuation of the company caps upside and the market is already factoring a sharp business recovery over FY22, mentions the brokerage firm. 

The company said its aerospace arm, Titan Engineering and Automation Ltd was impacted severely due to the pandemic even as its automation solutions business performed well. 

“The jewellery division ran a diamond-studded promotion in the quarter and that led to the good recovery of the studded segment of the business,” the company said in its exchange filing.