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.
