Titan growth outlook positive after Q1 net profit jumps 3825%; pent-up demand, strong footfalls boost earnings

After delivering its second-best quarterly revenue in Q1FY23, Titan Company is positive about delivering strong earnings in the remaining FY23 quarters as well.

Titan growth outlook positive after Q1 net profit jumps 3825%; pent-up demand, strong footfalls boost earnings
Titan Company's consolidated net profit for April-June quarter grew 3,825% on-year to Rs 785 crore in the quarter as against Rs 20 crore reported in the same quarter a year ago.

After delivering its second-best quarterly revenue in Q1FY23, Titan Company is positive about delivering strong earnings in the remaining FY23 quarters as well. “The financial year has begun well for us and we delivered a strong performance in Q1 across our business segments. Despite challenging macro environment, the outlook for the remaining quarters looks positive and we continue to execute our investment plans in India as well as chosen international geographies,” said CK Venkataraman, Managing Director of the company after the Tata group firm reported that its consolidated net profit for April-June quarter grew 3,825% on-year to Rs 785 crore in the quarter as against Rs 20 crore reported in the same quarter a year ago.

Company’s total expenses were higher at Rs 8,415 crore, up 141% from Rs 3,480 crore in the corresponding quarter last year. “Although the macroeconomic climate is difficult, the outlook for the upcoming quarters is encouraging, according to Titan MD Venkataraman. Titan is trading at a PE of 99 at the current market price of Rs 2,432.9, which indicates a high valuation,” said Rahul Goud, Research Analyst, CapitalVia Global Research.

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Growth outlook strong amid upcoming festive season

The healthy earnings were on the back of strong festive demand in a near normal Q1 that came after a gap of two Covid disrupted periods of Q1FY21 and Q1FY22. All three verticals of jewellery, watches and eyewear reported robust year-on-year and sequential growth aided by pent-up demand and strong footfall, Titan said. Jewellery business alone clocked revenue of Rs 8,351 crore as compared to Rs 3,050 crore in Q1FY22, up 173% on-year riding on a good Akshaya Tritiya sales and a better studded mix compared to the same quarter previous year.

Watches & Wearables, EyeCare business income more than doubles

Titan’s Watches & Wearables business reported its best quarterly income of Rs 786 crore in June 2022 quarter, 168% on-year growth compared to Rs 293 crore in Q1FY22. Similarly, EyeCare business also reported its highest quarterly income of Rs 183 crore with 173% on-year growth in the June quarter compared to Rs 67 crore in the corresponding quarter last year. Other businesses comprising Indian dress wear and Fragrances & Fashion Accessories reported an income of Rs 144 crore, up from Rs 83 crore in Q1 FY22, a growth of 73% on year.

Titan reported total income of Rs 9,487 crore during the quarter under review, up 169% on-year from Rs 3,519 crore during the June 2021 quarter. It reported EPS of Rs 8.84 for the period ended June 30, 2022 as compared to Rs.0.22 for the same year-ago period. Titan has added a total of 125 stores during the year. Titan’s retail chain (including Caratlane) has 2,303 stores across 366 towns with an area exceeding 2.9 million sq. ft. as on June 2022.  

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Accumulate Titan at dips

Titan shares ended marginally higher on Friday at Rs 2,428, up 0.18% on NSE. So far this year, the stock has tumbled 3.8%, underperforming benchmark indices. “One should wait for some improvement before acting. Build up your supply gradually on a lower level. Technically, the stock has been moving up since March 2022; therefore, an investor can purchase it during a drop at a price of Rs 2,100 with a stop loss of Rs 1,850 and a target price of Rs 2,800,” said Rahul Goud, Research Analyst, CapitalVia Global Research.

According to the shareholding pattern of Titan, as of 30 June 2022, Big Bull Rakesh Jhunjhunwala’s shareholding in Titan stands at 3,53,10,395 equity shares or 3.98%. Meanwhile, Rekha Jhunjhunwala holds 95,40,575 equity shares or 1.07%. Cumulatively, the couple holds 4,48,50,970 equity shares or 5.05%.

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