Titan Co. Ltd shares dived over 9% in intra-day trade on Wednesday after the company’s September quarter (Q2) earnings missed Dalal Street estimates. Profit during the quarter grew by a tepid 1.8% to Rs 320.2 crore due to poor performance by the jewellery business.
At 10:40 am, Titan shares were trading at Rs 1,179.30, down 8.1%, after hitting an intra-day low of Rs 1,165. Notably, the stock has jumped by over 39% in the last one year.
Titan’s revenue during the September quarter grew just 0.6% year-on-year to Rs 4,435 crore. The jewellery business, which contributes 80% to the total revenue, reported a decline of 1.5% in revenue at Rs 3,528 crore compared with the year-ago period. However, revenue from the watches segment jumped 6.4% to Rs 718.7 crore.
Operating profit, or earnings before interest, tax, depreciation and amortisation (Ebitda), in the September quarter increased 9.9% to Rs 513.2 crore compared with a year ago, while margins grew 100 basis points to 11.6%.
According to an analyst poll by CNBC-TV18, profit was expected at Rs 378 crore on revenue of Rs 4,515 crore, while Ebitda was estimated at Rs 536 crore with a margin of 12%.
Titan also lowered its revenue growth guidance for the second half of the fiscal year (October 2019 to March 2020) sharply to 11-13% from 20% earlier.
After the earnings, brokerage firm Credit Suisse maintained a ‘neutral’ rating on the Titan stock with a target of Rs 1,110. According to the firm, subdued festive sales led to a cut in FY20 guidance. It also cut Titan’s earnings estimate for FY20-22 by 8-10%.
Meanwhile, CLSA downgraded Titan to ‘Sell’ with the stock target price cut to Rs 1,025 from Rs 1,350 earlier. The brokerage said that Q2 earnings were disappointing on almost all fronts. The brokerage firm, too, reduced the company’s earnings per share (EPS) forecasts by 12-16%.
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