Rakesh Jhunjhunwala stock Titan rose in early trade on Monday after the company posted robust numbers for the quarter ended June 2022. Net profit of Titan Company rose 3,825% to Rs 785.00 crore in the Apr-Jun quarter, as against Rs 20 crore during the corresponding year-ago quarter. Titan’s net sales rose 198% to Rs 8,975 crore during the quarter under review, up from Rs 3,004 crore during the same quarter in the previous year. Titan share price jumped 1% to hit an intraday high of Rs 2,475 on BSE. Analysts remain bullish on the stock and see up to 28% upside going forward.
Should you buy, hold or sell Titan Company shares?
Stellar earnings CAGR trend to continue
Titan has a strong runway for growth, given its market share of sub-10% in Jewellery and continued struggles faced by its unorganised and organised peers. Its medium-to-long-term earnings growth visibility is nonpareil, said domestic brokerage firm Motilal Oswal in its report. Despite the volatility in gold prices and COVID-led disruptions, earnings CAGR has been stellar at 24% for the past five-years ending FY22. Analysts expect this trend to continue, with a 26% earnings CAGR over the next couple of years. “The stock’s near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples. We maintain our Buy rating on Titan shares with a target price of Rs 2,670 per share,” they said.
Well placed to capitalise on long term growth opportunities
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% PAT CAGR over FY22-24 and remains positive given structural story on account of market share gains, strong balance sheet, franchisee based model and strong brand. It maintains ‘Accumulate’ rating on the stock with a DCF based Target price of Rs 2,607.
Faster traction in Taneira, handbags, and international operations remain potential upside
Another brokerage firm Emkay Global believes that Titan offers high-teens growth visibility and an improving RoIC profile (~45% by FY25E), led by low penetration and focus on improving product assortment + profitability turnaround in eyewear/Caratlane businesses. “A faster traction in Taneira, handbags, and international operations remains a potential upside. We maintain Buy with a revised target price of Rs 2,700 (Rs 2,530 earlier),” it said.
Analysts at Edelweiss Securities also maintain a ‘buy’ call on the stock and see up to 28% upside going forward. “Factoring in the margin outperformance, we are raising FY23E EPS by 4%. We value Titan at 80x 9MFY24E EPS (76x FY24E) – a premium to its five-year average of 60x – and this reflects its growth trajectory and potential scale-up in other verticals, i.e. Watches & Wearables and Caratlane,” they said. Titan remains among their top picks.
According to the latest shareholding pattern of Titan on the BSE, Rakesh Jhunjhunwala held 3.5 crore shares or 3.98 stake, while his wife Rekha Jhunjhunwala held 95 lakh shares or 1.07% stake in the Tata Group company as of 30 June 2022.
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