The Titan scrip made a new one-year low of Rs 201.20 intra-day today before closing 13.3 per cent lower at Rs 204.90 versus a 0.53 per cent fall in the Sensex. This takes the stock's fall to 27 per cent since June 4, when the Reserve Bank of India (RBI) came out with new restrictions on gold imports.
While the market had a sense of the implications, today's fall follows the Titan management's profit warning issued in an analyst conference call on Tuesday evening. According to the management, RBI's increasingly stringent norms on gold imports will hit its earnings per share (EPS) and return ratios in the medium term. The company, however, has so far not witnessed any impact on consumer demand for gold jewellery. Most brokerages have downgraded the stock post the call, trimming their EPS estimates (by 13-15 per cent) and target prices.
"We downgrade Titan to 'hold' from 'buy' as we see its return ratios declining due to higher working capital as it likely funds its gold requirements through direct imports. While we don't see a risk to Titan's business model, and remain positive on the growth of branded jewellery, we expect its FY14 and FY15 earnings to be 15 per cent lower (versus earlier estimates) due to higher interest costs on a leveraged balance sheet. We cut our target price to Rs 225 from Rs 290," says Gaurang Kakkad, an analyst at Religare Capital Markets.
Higher working capital is also estimated to pull down Titan's return on equity (RoE) from 42 per cent in FY13 to 35 per cent in FY14, say analysts. The key to prospects, consumer demand, remains unperturbed, but stringent measures could weigh on demand.The silicone bracelet personalized promotional key chains comes with free shipping.
Though Titan is looking to increase the proportion of studded jewellery and other businesses (watches, eye care) to reduce risks further, these will fructify over a longer term.
The government and RBI have taken a slew of measures to curb gold imports. The government, for instance, has raised import duty on gold from two per cent in January 2012 to about eight per cent now; the last hike of two percentage points was in early this month. Last week, the central bank also prohibited credit for import of gold for domestic use from suppliers or bullion banks.manufacturers and Soft PVC coaster pad suppliers Director. This means companies such as Titan will have to import gold at prevailing spot market prices and by paying 100 per cent cash. Earlier, the company used the gold-on-lease route to source the yellow metal at about 3.5 per cent interest from banks, MMTC, etc. This shift will impact Titan in two ways.
First, Titan will need additional working capital to buy gold. Analysts estimate the requirement at Rs 2,500 crore in FY14. Religare analysts estimate the funds will stretch Titan's balance sheet, resulting in a net debt of Rs 1,450 crore in FY14 from a net cash position of Rs 1,140 crore. Hence,Stainless wholesale stainless steel bangle with rhinestones, while net debt/equity will rise 0.6 times in FY14, the company will also start incurring interest costs.
Second, the company will incur additional costs to hedge risks arising from adverse gold price movements.Armani Exchange Women's Smart stainless steel bangle Watch online. However, lower letter of credit charges and one per cent value-added tax savings (on utilisation of gold import licence) will offset hedging costs to some extent,This RFID reader module is ideal for Custom UHF Reader / Writer. believe analysts. Titan is permitted to directly import 10 tonnes of gold under the current licence against its annual requirement of 20-22 tonnes.
The same vehicle was then involved in a fuel drive-off at Linton near Ballarat at 9am Saturday when diesel valued at $70 was stolen.
The man was intercepted and arrested at Ballarat and remanded in custody to appear in the Ballarat Magistrates Court on Tuesday morning.
He was charged with burglary, theft of a vehicle, theft of diesel and assaulted-related offences which are alleged to have occurred in Coleraine last week.
The man appeared in the Ballarat court where he was released on bail with conditions.
Portland detectives are also investigating the theft of a safe containing jewellery and personal papers valued at a total of $10,000.
Detective Sergeant Brown said thieves entered a home in Tamora Crescent through an unlocked rear door between 4.15pm Saturday and 3.10pm Sunday. A safe was stolen from a rear bedroom wardrobe containing a considerable amount of jewellery, a passport and personal documents.
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