Titan Company, a Jhunjhunwala portfolio stock, fell in Monday’s trade after the company declared its September quarter earnings. Analysts, however, largely maintained their positive view on the stock, with price targets that suggest a 17 per cent potential upside.
The Tata group firm posted a 30.2 per cent year-on-year (YoY) jump in its consolidated net profit at Rs 835 crore for the quarter compared with Rs 641 crore in the year-ago quarter. Sales for the quarter jumped 18.3 per cent YoY to Rs 8,567 crore from Rs 7,243 crore in the same quarter last year, Titan said.
Read more: Titan Q2 profit jumps 30% to Rs 835 crore; margin at 15%
On Monday, the scrip declined 2 per cent to hit a low of Rs 2,708.25 on BSE. The stock hit a 52-week high of Rs 2,790 on October 31, 2022.
Emkay Global has maintained its ‘Buy’ rating on Titan Company with a target price of Rs 3000, given the continued potential for consistent earnings compounding, based on its modest market shares in several large and growing product categories.
It said its revised December 2023 target is based on a higher multiple of 53 times than 50 times earlier. “The upgrade in the valuation multiple is driven by a 50 bps increase in our medium-term growth expectations, on higher growth expectations in Taneira/Handbags/International, as also higher long-term sustainable RoE,” it said.
Motilal Oswal believes Titan has a strong runway for growth, given its market share of sub-10 per cent in Jewellery and the continued struggles faced by its unorganised and organised peers.
Titan’s medium-to-long-term earnings growth visibility is nonpareil. Despite the volatility in gold prices and Covid-led disruptions, earnings CAGR has been stellar at 24 per cent for the past five years ending FY22, Motilal Oswal said.
The brokerage expects the trend to continue, with a 31 per cent earnings CAGR over FY22-24. “Changes to our model have resulted in a 9 per cent/8 per cent rise in our FY23/FY24 earning per share estimate due to a positive earnings surprise in Q2FY23 as well as a better-than-expected commentary for October 2022,” it said.
“The stock’s near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples. We maintain our Buy rating, with a target price of Rs 3,210 per share,” it added.
Titan’s Managing Director CK Venkataraman said the company has continued its strong performance into Q2 across all business segments. Despite an uncertain macro environment, the current festive season starting from the end of September month and continuing till the end of October has been quite positive and consumer confidence remains upbeat, he said.
Prabhudas Lilladher believes that strong wedding jewellery demand and improved mix and benefits of network expansion, aggressive store expansion of 250-300 in eyewear and acceleration in store openings in watches and scale-up in emerging businesses like Taneira and wearables will be major growth drivers for Titan going forward. It has an Accumulate rating on the stock with a target price of Rs 2729.
ICICI Direct Research has a ‘Buy’ rating on the stock with a target price of Rs 3,240. It continues to remain structurally positive on the stock, as it feels that high growth visibility justifies Titan’s premium valuations.
“Thrust on wedding space is bearing fruit with wedding jewellery becoming a critical growth driver while its share in overall jewellery revenue has increased meaningfully,” it said.
Late investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala held a 5.5 per cent stake in Titan at the end of the September quarter, as per the shareholding pattern available with Trendlyne.