Titan shares rose 4.55% to Rs 2,409.75 on Friday, February 3 2023 despite the company’s EBITDA missing market estimates. Titan topped the list of late Rakesh Jhunjhunawala’s favourite stocks, and hasn’t shown any significant movement since the demise of the big bull. In the last one month, the stock has fallen over 7% while it has risen nearly 200% in the past five years. Several brokerages hold a buy rating for Titan shares with a target price of up to Rs 3070.
“Titan’s operational performance came in below our estimates owing to miss on the margins front. Gross margins were mainly impacted owing to competitive offers and pricing offered on making charges. Titan continues to be one the fastest growing discretionary companies (three-year CAGR: 23%) in our retail coverage universe. Robust performance in challenging times reaffirms our thesis of long-term market share gains for Titan. A sharp rise in gold prices and a slowdown in discretionary demand could pose challenges in the near term, however, the long-term story remains intact with the company aspiring to grow jewellery revenues by 2.5x by FY27,” said analysts at ICICI Securities.
Titan stock call: Should you buy, hold or sell Titan shares?
Philip Capital – Buy
Target price – Rs 2,700
“We have cut our FY24-25 EPS estimates by 7-10% to account for weak 3Q results, increased competitive intensity and higher volatility in the gold price which will eventually lead to deferment of demand and continue to maintain BUY with TP of Rs 2700 (55x FY25 EPS), said analysts ate Philip Capital.
Motilal Oswal – Buy
Target price – Rs 3070
The brokerage’s outlook for the company remains robust. “TTAN has a strong runway for growth, given its market share of sub-10% in Jewelry and continued struggles faced by its unorganized and organized peers. Its medium-to-long-term earnings growth visibility is nonpareil. Maintain BUY with a TP of INR3,070 (premised on 55xFY25E EPS),” said analysts at Motilal Oswal.
Sharekhan – Buy
Target price – Rs 2950
“Titan’s Q3 performance can be considered an aberration and we should see good growth with stable margins in the quarters ahead. The company is aiming to generate a revenue CAGR of over 20% revenue during FY2022-FY2027 on the back of its ambitious growth plan in the medium term. This along with consistent margin improvement will help cash flows to improve in the coming years. A strong growth outlook, industry tailwinds in the medium term, and a strong balance sheet make it the best play in the retail space. The stock has corrected by 17% in the last two months and is currently trading at 61.9x/52.5x/42.9x in its FY2023E/24E/25E earnings. We maintain our Buy recommendation on the stock with a revised price target of Rs. 2,950,” said analysts at Sharekhan by BNP Paribas.
Kotak Institutional Equities
Fair Value – Rs 2700
“We cut FY2023-25E EPS by 3-7% and revise FV of Rs2,700 (Rs2,900 earlier) We trim our jewellery growth forecast as we factor in the discretionary slowdown (not seen by Titan so far) and some impact of the sharp rise in gold prices. We lower the jewellery EBIT margin forecast by 50 bps, given the highly competitive activity. We model 14.6%/15.2% yoy growth in consolidated jewellery sales and EBIT margins of 12.4%/12.6% in FY2024/25E. Revise FV to Rs2,700 (Rs2,900 earlier); it implies 55X March 2025 PE,” said analysts at Kotak Institutional Equities.