HDFC Securities is Negative on Titan and Trent by Up to 25%

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HDFC Securities is Negative on Titan and Trent  by Up to 25%

By Aditya Raghunath

Investing.com -- HDFC Securities recently released a report on consumer discretionary stocks. The firm said that these discretionary categories have been hit by the second wave, and underlying demand continues to remain impacted by the second wave of the pandemic. F&G, jewellery, paints and apparel are expected to clock 5%, -23%, -5%, and -39% (2-yr CAGR). Ticket sizes in retail, though normalising, remain elevated from the pre-COVID levels; footfalls are still far from full recovery.

It has given Titan Company Ltd (NS: TITN ) a target price of Rs 1,400, a 17% potential decrease from its current price of Rs 1,688. It says the estimated outlook for Q1 FY22 is weak and that it has built in -2% EBIT margin at company level. HDFC (NS: HDFC ) Securities expects 1/-11/-12% EBIT margins for jewellery/watches/eyewear respectively. It has also built in a 55.5% topline growth for Titan (two-year CAGR -23%).

For Trent Ltd (NS: TREN ), the firm has a target price of Rs 655, a downside of almost 25% from its current price of Rs 867. It expects revenue to grow 171% YoY on a low base (two-year CAGR: -42%). It expect GMs to improve meaningfully YoY to 50% (vs 13%). It has built in Rs 719 million of EBITDA losses (vs Rs 1,190 million in 1QFY21).

 

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