Titan remains under pressure on fear of potential COVID-19 lockdowns despite a strong quarter
- Shares of Titan surged more than 3% in initial trade on Friday as the company reported strong numbers for the December quarter led by good festive demand.
- However, analysts feel the fear of a third wave of COVID-19 could disrupt the strong demand environment for the brand.
- Titan’s jewellery business, watches and eyewear business grew 37%, 28% and 27% from October to December.
AdvertisementThe optimism around the Bengaluru-based luxury products company may be short lived if a third wave of covid-19 emerges, says analysts.
Shares of the company gained over 3% in the initial trade as the company reported strong numbers for the December quarter led by good festive demand. However, all the gains made in the first few minutes of trade were wiped off later.
Titan’s stock closed nearly 1% lower at ₹2,571 on January 7.
The Company witnessed strong demand across its consumer businesses and clocked 36% growth in the festive quarter of October-December.
The growth in the jewellery segment due to festive purchases in October and November helped contribute significant revenue, said Titan.
|Business segments||Year-on-year growth||New store additions|
|Watches and wearables||28%||20|
|Titan Engineering and Automation||-9%||-|
“Both walk-ins and customer conversions were significantly higher compared to last year. The contribution from Tier-1 towns continued to improve and were close to pre-pandemic levels,” said the company in an exchange filing.
However, analysts believe that the fear of a third wave may hinder the company’s near term growth.
“Emergence of third wave of COVID-19 would act as a key risk to the near-term performance affected by any lockdown imposed by various states and postponement of wedding season,” said analysts from broking firm Sharekhan.
The company’s financial performance was impacted during the first half of FY21 as many of its stores were closed due to national lockdown. Titan’s profitability came down sharply from pre-pandemic levels.
|FY21||₹21,644 crore||₹974 crore|
|FY20||₹21,052 crore||₹1,493 crore|
|FY19||₹19,779 crore||₹1,388 crore|
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