scorecardresearchTitan stock falls after Q2 but brokerages remain positive on the stock

Titan stock falls after Q2 but brokerages remain positive on the stock

Updated: 07 Nov 2022, 04:33 PM IST
TL;DR.
Brokerage firm Motilal Oswal Financial Services has a buy call on the stock with a target price of 3,210.
Titan registered a 33.7% rise in net profit to  <span class='webrupee'>₹</span>857 crore for the September 2022 quarter.

Titan registered a 33.7% rise in net profit to 857 crore for the September 2022 quarter.

It seems that the September quarter numbers of Titan Company failed to meet market expectations as the stock fell more than 2% in intraday trade on BSE on November 7. The stock closed with a loss of 0.95% at 2741.95.

As Mint reported earlier, Titan registered a 33.7% rise in net profit to 857 crore for the September 2022 quarter against a net profit of 641 crore in the year-ago period.

The revenue from operations grew 22% to 8,730 crore in Q2FY23 from 7,170 crore a year ago.

Brokerage firms were largely positive on Titan's Q2 numbers.

Motilal Oswal Financial Services has a buy call on the stock with a target price of 3,210. The brokerage firm said Titan has a strong runway for growth, given its market share of sub-10% in Jewelry and the continued struggles faced by its unorganized and organized peers.

"Its medium-to-long-term earnings growth visibility is nonpareil. Despite the volatility in gold prices and Covid-led disruptions, earnings CAGR has been stellar at 24% for the past five years ending FY22. Motilal Oswal expects this trend to continue, with a 31% earnings CAGR over FY22-24," said Motilal Oswal.

"Changes to our model have resulted in a 9% and 8% rise in our FY23 and FY24 earnings per share (EPS) estimate, respectively, due to a positive earnings surprise in Q2FY23 as well as a better than expected commentary for October 2022. The stock's near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples," Motilal Oswal said.

On the other hand, JM Financial has a 'hold' call on the stock but raised the target price to 2,980 from 2,900 earlier.

JM Financial highlighted that Titan delivered another solid quarter led by Jewellery margin hitting a new threshold (more than 15% with some once-off elements).

"The business has also clocked strong growth of 18-19% during the just-concluded festive season - on a base that wasn’t all that soft. Still, however, management was uncharacteristically non-committal on a blowout Dec-Quarter and cited volatility in the environment and tougher base to be the reasons for the same. Studded mix picked up (32%) which helped Q2 margin," said JM Financial.

Brokerage ICICI Securities maintained an 'add' call on the stock but raised the target price to 2,950 from 2,900 earlier.

"We increase our FY23-24E earnings estimates by nearly 9-1%, modelling revenue, EBITDA and PAT CAGR of 21%, 29% and 31%, respectively, over FY22-24E. Key downside risks are an irrational competitive environment and sustained weakness or worsening of the macro environment leading to demand slowdown," said ICICI Securities.

According to a MintGenie poll, an average of 30 analysts have a ‘buy’ call on the stock.

Disclaimer: The views and recommendations given in this article are those of the broking firms. These do not represent the views of MintGenie.

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First Published: 07 Nov 2022, 12:01 PM IST