Titan Shines Following Strong Q1 Results, Brokerages Maintain 'Buy' Tag

Titan on Thursday reported a 20 per cent revenue growth compared to the same quarter last year, with all their key consumer businesses exhibiting double-digit growth in the past quarter

Stock of Titan closed at Rs Rs 3,144.75 apiece, up 1.26 per cent on the BSE on Friday. 

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Titan's share price witnessed a gain on July 7 morning following their exceptional operational performance update for the first quarter of fiscal year 2023-23. The jewellery maker on Thursday reported a 20 per cent revenue growth compared to the same quarter last year, with all their key consumer businesses exhibiting double-digit growth in the past quarter.

On Friday, the jewellery maker's shares opened more than 2 percent higher and reached a high of Rs 3,205 on NSE. Additionally, the stock, which is currently at an all-time high, has been consistently hitting fresh 52-week highs on a daily basis, as per a MoneyControl report. 

Stock of Titan closed at Rs Rs 3,144.75 apiece, up 1.26 per cent on the BSE on Friday. 

On Thursday, the company reported that buyer growth for their jewellery division in Q1 of FY24 was higher than the average ticket size growth, with a 21 per cent year-on-year increase. Their watches and wearable division also experienced a 13 per cent year-on-year growth, including an 8 per cent growth in their analog watches segment and an impressive 84 per cent growth in wearables. However, when compared sequentially, the sales growth of watches has slowed down to 2 per cent.

A subsidiary of Titan, Caratlane, showed a strong revenue growth of 32 per cent year-on-year, indicating an impressive four-year compounded annual growth rate of nearly 50 per cent. The revenue for Titan Eye+ also increased by 10 per cent year-on-year, with trade and distribution expanding faster than the eyecare division.

Although the company's stock trading is at high valuations of over 58 times the estimated earnings per share for FY25, it has received "buy" ratings from brokerages, reported MoneyControl. 

"Q1 performance was particularly boosted by the Akshaya Tritiya festival and increased wedding-related purchases in June," said Morgan Stanley, as per the report. The brokerage has maintained an “overweight” rating on Titan with a target price of Rs 3,207 per share.

Goldman Sachs on the other hand placed a “buy” call on Titan with a target price of Rs 3,175 a share, as per the report. They said that jewellery sales growth exceeded expectations and resulted in a four-year compounded annual growth rate of 23 per cent.

According to Kotak Institutional Equities, Titan also decreased franchise incentives for Tanishq outlets during the first quarter. Analysts at Kotak understand that this indicates management’s focus on expanding jewellery EBIT margins, or protecting margins in the case of a rise in competitive intensity in the market, the report said.