Business strategy

Titan Surges After Net Sales Rise 171.9%. Should you Buy?

Titan Shares Today: Rakesh Jhunjhunwala portfolio stock Titan rose in early trade on Monday as the company posted robust numbers for the quarter ended June 2022. On a sequential basis, the profit increased 61.5 percent. Standalone revenue for the Tata group company rose 176 per cent to Rs 8,961 crore. On a sequential basis, revenue rose 23 per cent. Titan share price were up 1 per cent to hit an intraday high of Rs 2,475 on BSE.

EBIT (earnings before interest and tax) for the jewellery business surged 396 per cent to Rs 1,027 crore year on year. The watches and wearables business witnessed its best quarter ever in terms of sales. The income for the business jumped 169 per cent year on year to Rs 785 crore. Income for the eyecare business increased 173 per cent year on year to Rs 183 crore while EBIT stood at Rs 36 crore in the Jun quarter.

Rakesh Jhunjhunwala Share Holding

The ace investor along with his wife Rekha Jhunjhunwala owns over a 5 per cent stake in Titan Company, which was worth 10,911.30 crore, as per Trendlyne.

Should you Invest?

Analysts at Edelweiss said that Titan’s numbers were exceptional, with an estimate-beating margin of 13 per cent in the Jewellery segment being the key highlight. “Factoring in the margin outperformance, we are raising FY23E EPS by 4 per cent. We value Titan at 80 times 9MFY24E EPS (76 times FY24E) – a premium to its five-year average of 60 times – and this reflects its growth trajectory and potential scale-up in other verticals, i.e. watches & wearables and Caratlane,” it said while suggesting a target of Rs 3,119.

Global brokerage Emkay said Titan reported an 8 per cent beat to its Ebitda estimates. “Ex-bullion sales, consolidated Ebitda margin at 13.2 per cent was 200 bps higher than pre-Covid levels, led by operating leverage, exit from loss-making ventures and 80 bps one-off,” it said.

“We raise FY24/25 EPS by 3-4 per cent, led by Q1 beat and upbeat commentary. Titan offers high-teens growth visibility and an improving RoIC profile (45 per cent by FY25E). We maintain Buy with a target of Rs 2,700 from Rs2,530 earlier, valuing Titan at a reduced multiple of 50 times due to a 3-month rollover. Faster traction in Taneira and International operations could offer potential upside,” Emkay said.

Brokerage firm Prabhudas Lillader believes that new launches in Taneira, wearables and Fastrack Prescription Eyewear can emerge as new growth drivers for Titan. The company is well placed to capitalise on long-term growth opportunities led by jewellery share gains due to network expansion, regional thrust and hallmarking benefits; Omni-channel strategy across jewellery, watches and eyewear; new growth drivers like Caratlane, Titan Eye+, Taneira; and entry into high growth segments like wearables such as smart watches, over the head headphones and Truly Wireless earphones, according to analysts.

The brokerage estimates 33.82 per cent PAT CAGR over FY22-24 and remains positive given the structural story on account of market share gains, strong balance sheet, franchisee-based model and strong brand. It maintains an ‘Accumulate’ rating on the stock with a DCF-based Target price of Rs 2,607.

The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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