Titan vs Kalyan Jewellers: Which jewellery stock should you consider post Q3 business updates?
Shares of Titan Company Limited and Kalyan Jewellers India are in focus after the companies reported their December quarter updates.
Titan reported a double-digit growth of 12 per cent (YoY) in standalone business, with the jewellery segment growing at 11 per cent YoY, Watches & Wearables at 14 per cent, EyeCare at 10 per cent and emerging businesses at 75 per cent.
Kalyan Jewellers recorded a consolidated revenue growth of 13 per cent in Q3 FY2023 as compared to the same period in the previous financial year. The company added 5 net new ‘Kalyan’ showrooms (all non-south) during the recently concluded quarter, taking the total number of showrooms in India to 136 as on 31st Dec 2022.
Notably, the shares of Titan are down over 7 per cent in the last one year. However, the Tata Group company stock has managed to deliver over 800 per cent return in the last 10 years.
On the other hand, Kalyan Jewellers’ stock is up over 92 per cent in the last six months.
Brokerages are largely bullish on Titan stock post-December quarter updates. Prabhudas Lilladher believes that the double-digit Jewelry sales growth shows the market share gains despite tepid demand led by aggressive store expansion, focus on studded and lighter jewellery, new ranges in wedding segment and designs & campaigns to cater to regional tastes and preferences.
The brokerage has maintained Accumulate rating on the stock with a target price of Rs 2,875. “We believe new businesses like Wearables, Taneira (Distribution and product range led), Carat lane (50% sales growth YoY) will continue to gain traction,” it said.
ICICI Securities believes that Titan is one company where the capabilities to translate the opportunity to earnings are high. However, sustained weakness or worsening of the macro environment can lead to some slowdown, which has not been factored in. The brokerage firm has maintained an ‘Add’ rating on the stock with a target price of Rs 2,800.
According to Motilal Oswal, the earnings growth visibility for Titan remains strong. Unlike other high-growth categories, the competitive intensity from organized and unorganised peers in jewellery is considerably weaker. The structural investment case for Titan is intact. We maintain our ‘Buy’ rating with a target price of Rs 3,080,” it said.
Centrum Broking reckons Kalyan’s strategy revolved around adding new stores in non-south markets and calibrated expansion in the Middle East region.
In addition, the recently concluded quarter benefited from big-ticket weddings deferred in Jan ’22 early this year, however online jewellery format, Candere recorded degrowth, it said.
It added that Kalyan’s management appears to be confident in its strategy of non-South markets to improve the studded ratio, (Franchise Owned Company Operated) FOCO model and serve millennials meeting their aspirational demand by introducing new designs.
“We expect the demand to continue to be robust in Q4FY23 and maintain a positive view on FOCO opportunity driving profitability. We retain BUY, with a DCF-based target price of Rs 138,” it said.
According to DAM Capital, Kalyan’s narrative is built on per-store throughput recovery to pre-Covid levels, which it achieved in Q3 and it hopes to maintain scaling up the store network via non-south franchisee-led expansion, which seems to be on track. Key risks could be slower than expected scaling up of store throughput in new franchisee stores.
It has a ‘Buy’ rating on Kalyan Jewellers stock with a target price of Rs 148 per share.
Shares of Titan Company ended 0.64 per cent lower at Rs 2,467.30 on BSE on January 10, 2023. Kalyan Jewellers’ stock also tanked 3.47 per cent to end at Rs 120.90.
Disclaimer: Recommendations and opinions given by the experts are their own. These do not represent the views of Business Today
