Titan Stock Nears 1-Year High, Experts Suggest Buy With Target Price ₹3,240

In Q2FY23, Titan reported a 33.7% increase in net profit for 857 crore against a profit of 641 crores in the same period a year ago. Operating revenue jumped 22% to 8,730 crores in Q2FY23 versus 7,170 crore in the second quarter of FY22.

During the second quarter, Titan’s jewelry business recorded revenue of 7,203 crore up 18% YoY, while the Watches and Wearables business grew 21% YoY to reach 829 crores. Meanwhile, the wearables segment posted impressive growth of 246% at 88 crore. In addition, the ophthalmology business recorded year-on-year growth of 4% for 167 crore, and that of other businesses comprising Indian Apparel and Perfume & Fashion Accessories grew 59% YoY for 73 crore in Q2FY23.

As of September 30, 2022, Titan’s retail chain (including Caratlane) had 2,408 stores in 382 cities with an area exceeding 3 million square feet.

Last week, on Friday, shares of Titan closed at 2768.30 each per 5.05 or 0.18% on BSE. The company’s market capitalization is nearly 2.46 million crores.

Should You Buy Titan Stock?

Amnish Aggarwal, Head of Research, Prabhudas Lilladher said, “Strong momentum continues across all key business segments, driven by network expansion and positive consumer sentiment.”

“We believe that 1) strong demand for wedding jewelry and improved mix and benefits of network expansion 2) aggressive expansion of stores from 250 to 300 in eyewear and 3) acceleration of store openings stores in watches and 4) expansion into emerging businesses like Taneira and apparel will be major growth drivers for TTAN going forward,” added Aggarwal.

In addition, according to analysts at ICICI Direct, guided by management in its pre-quarter update, the jewelry division (excluding gold bullion sales) recorded robust sales growth of 18% year-on-year at 7,515 crores (impressive three-year CAGR: 27%). The Watches division recorded its highest quarterly sales of 830 crore (up 21% YoY). Global consolidated revenues (including the sale of gold bullion: 482 crore) increased by 22% year-on-year to reach 9163 crores

Additionally, in a report, ICICI Direct pointed out that despite an increase in marketing and other expenses, the improvement in studded ratio share and the positive impact of low-cost diamond inventory led to higher margins. EBITDA by 70 basis points year-on-year to 13.6% (second highest margin). Absolute EBITDA increased 29% year-on-year to reach 1,247 crores (three-year CAGR: 34%).

On stock performance, ICICI Direct’s rating said, “Titan has been an outstanding performer in the discretionary space with a share price appreciating at ~30% CAGR over the past five years.”

Going forward, ICICI Direct continues to remain structurally positive on the stock as strong growth visibility justifies premium valuations. They maintained a buy rating on Titan shares. He said, “In introducing FY25E, we are deferring our ratings and now rating Titan at 3,240 i.e. 66x P/E on average of BPA FY24-25E (former TP 3,080).”

ICICI Direct in its report highlighted the key drivers for Titan’s future price performance. These are:

– A strong balance sheet and asset-light distribution model allowed it to outpace its peers in terms of store additions (to add more than 35 Tanishq stores in FY23).

– Aims to grow jewelry revenue 2.5x by FY27 (implied CAGR: 20%). Large growth margin with a current market share of ~6% in 4 lakh crore market.

– The push into the bridal space is paying off, with bridal jewelry becoming a key growth driver, while its share of overall jewelry revenue has increased significantly.

– Gradual recovery of the studded ratio to promote gross margins in the future.

In one month, Titan stock soared more than 7% on BSE. Meanwhile, the stock has soared nearly 14% in one year. The stock was around 2,432 levels on November 4 last year.

From its 52-week low of 1,827.15 each which was hit on July 1, 2022, Titan stock has soared over 51% to date. This strong increase is recorded over just over 4 months.

The late Rakesh Jhunjhunwala, nicknamed the “Warren Buffett of India”, was one of the main investors in Titan shares. His wife Rekha Jhunjhunwala also. In fact, this Tata stock is the biggest wealth creator in the Jhunjhunwalas portfolio. However, Jhunjhunwala passed away on August 14, 2022. But his estate including shares and property passed to his family. Titan continues to hold a larger portion of Jhunjhunwalas’ portfolio.

According to TrendLyne data, as of Q2FY23, Rakesh’s wife, Rekha Jhunjhunwala, increased her stake in Titan to 1.69% or 15,023,575 shares from the previous stake of 1.07% or 9,540,575 shares. . Rakesh’s stake in Titan is approximately 3.85% in Q2FY23, down from 3.98% in Q1FY23. Together, the couple owns 49,200,970 shares or 5.5% of Titan as of Q2FY23. At the end of the June 2022 quarter, the couple’s interest was approximately 5.1%.

Jhunjhunwala net worth is approx. 35,140.58 crores of shares — of which — almost 39% of the wealth or about 13,672.2 crore comes from Titan’s stock, according to the data.

Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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