Shares of Titan Industries soared 8 percent in a flat market on the BSE today as the government allowed the company to import gold directly. Shares of the Tata Group firm shot up to Rs 247 on the BSE. Later, however, it pared some of the gains and was trading at Rs 239.55, up 4.79 percent at 1025 hours.
In a first instance of the government allowing an actual user from private sector to import gold directly, Tata Group firm Titan Industries has been given nod to bring the yellow metal from overseas market. At present, only authorised agencies and public sector units like MMTC are allowed to import gold. Titan had approached Directorate General of Foreign Trade (DGFT), under the Commerce Ministry, seeking licence for direct gold import.
In its application, the company had said it would help in saving one percent of their operating cost and also it would get good quality gold. However, the company will have to hedge on the currency front for direct import of gold.
Ashwin Gujran, fund manager, has a buy rating on the stock with a target price of Rs 255 and a stop loss of Rs 230.
It should be noted that one Friday, financial services agency Morgan Stanley double downgraded Titan from ‘overweight’ to ‘underweight’, its target price being Rs 198. On Friday, the stock was down 6 percent at Rs 222.
What’s worse? Cash purchases account for over 50 percent of Tanishq’s sales. Moreover, buyers will be required to quote their Permanent Account Number (PAN) for these purchases.
In a report, Morgan Stanley had said “This proposal could mean consumers will shift to the unorganised trade (household jewellers), a significant portion of which may not be subject to the tax, we believe.”
With inputs from PTI