Shares of Titan Company jumped as much as 8 percent in early trade on BSE on July 7, a day after the company disclosed its June quarter performance (Q1FY23).
In its Q1FY23 update, the company said the June quarter was a "near-normal first quarter after a gap of two years".
"Sales in QIFY23 grew 205 percent year-on-year (YoY) on a low base and clocked three-year CAGR of 20.5 percent over Q1FY20, the only non-disrupted first quarter in the last three years. The network expansion and campaigns continued to progress well throughout the quarter," Titan said.
For the 'Jewellery' segment, revenues nearly tripled, clocking a growth of 207 percent YoY, Titan said, adding that 'Watches & Wearables' clocked a YoY growth of 158 percent, the 'EyeCare' segment grew 176 percent YoY and 'Other Businesses' segment saw a robust growth of 455 percent YoY.
Brokerages largely positive
Titan's Q1 update has fetched mostly positive views from various brokerage firms and most of them see a healthy upside in the stock from the current levels.
Brokerage firm Motilal Oswal Financial Services has maintained a 'buy' call on the stock with a target price of ₹2,900, anticipating a 48 percent upside in the stock.
"Titan remains our top pick in the largecap consumption space in India, with strong earnings growth visibility and compounding by nearly 20 percent for an elongated period of time," Motilal Oswal said.
"In the jewellery industry, which is organizing at a rapid pace, Titan is clearly at the vanguard among organized players in leading this growth. Its runway for growth is long, with a market share of nearly 6 percent. Unlike other high-growth categories, the competitive intensity from organized and unorganized peers in jewelry is considerably weaker. The structural investment case for Titan is intact. We maintain our buy rating with a target price of ₹2,900 per share, premised on 75 times Mar’24E earnings per share (EPS)," the brokerage firm added.
Brokerage firm Emkay Global has a 'buy' call on Titan with a target price of ₹ 2,530. The brokerage firm said a strong Q1 should drive an upgrade to the consensus estimates for Titan. However, the brokerage firm does not see material changes to its estimates given near-term volatilities due to a recent customs duty increase and higher inflation.
Brokerage firm Kotak Securities has an 'add' call on the stock with a target price of ₹2,400.
Kotak underscored that Titan’s Q1 update indicates a 207 percent YoY growth in jewellery sales, so 3-year CAGR has accelerated to 23 percent in Q1FY23 from 15 percent in Q4FY22.
"Studded share improved on a YoY basis and was back to pre-pandemic levels. Even if Titan delivers flat jewellery sales (YoY) over Q2-Q4FY23E, it will end the year with 22 percent growth; we see an upside risk of 500 bps to our growth forecast. Titan's long term attractiveness comes from (1) low market share in a large addressable market and (2) wide gap versus the competition and focus on keeping its lead," said Kotak.
An average of 29 analysts polled by MintGenie have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations made above are those of the broking firms and not of MintGenie.
