Titan loses its shine
Jewellery stocks are down in the red today and leading the pack is Titan Industries. The stock is currently down almost 2.5% at Rs.239.25, closer to its intra day low at Rs.235. The company had hit a 52-week low on 13th June at Rs.200.
The stock, along with PC Jewellers, Thangamayil, Tribhovandas, Shree Ganesh are all down on mounting concerns over the operations of the companies post the new measures announced by RBI on Wednesday to curtail the falling rupee. RBI has announced that gold jewellery companies will have to make full payment for buying gold for jewellery making and this is expected to put immense pressure on the working capital needs of the company. Till this rule, companies used to buy gold taking loans or on lease from banks and thereby meeting the working capital needs. Thus the new rule could mean more pressure on these companies EBITDA margins. Prior to this, the Govt had hiked import duty on gold, silver and platinum to 10% and raised excise duty on refined gold bar production from 7% to 9%. Following this move of RBI, many foreign brokerage houses have also downgraded the stocks.