Brokerage house Morgan Stanley has raised its rating on Titan Industries to 'equal weight' from 'underweight', and increased price target to Rs 245 from Rs 198.
Titan shares have been underperforming the broader market for a while now as the government has been trying to discourage consumption of gold by hiking import duty on the precious metal.
"Based on our discussions with various industry participants, it is likely that the Prevention of Money Laundering Bill, 2011 (PMLB), will be restricted to bullion and precious gems only and will not include jewellery retailing. If true, this removes a large overhang on the stock," the brokerage said in a note to clients.
However the brokerage said it is not increasing its rating to ‘overweight’ as long-term visibility on the business model remains clouded by government efforts to moderate demand for gold.
Also, Morgan Stanley says valuations are not cheap enough to be overly bullish on the stock.
“Titan is currently trading around 5% above its five-year average P/E. Policy action is a binary call, but the stock has to become materially cheaper for us to believe our concerns are adequately reflected,” the Morgan Stanley note said.
"Based on our discussions with various industry participants, it is likely that the Prevention of Money Laundering Bill, 2011 (PMLB), will be restricted to bullion and precious gems only and will not include jewellery retailing. If true, this removes a large overhang on the stock," the brokerage said in a note to clients.
However the brokerage said it is not increasing its rating to ‘overweight’ as long-term visibility on the business model remains clouded by government efforts to moderate demand for gold.
Also, Morgan Stanley says valuations are not cheap enough to be overly bullish on the stock.
“Titan is currently trading around 5% above its five-year average P/E. Policy action is a binary call, but the stock has to become materially cheaper for us to believe our concerns are adequately reflected,” the Morgan Stanley note said.
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