Titan Company Jumps 8% After Sales Nearly Triple in Q1; Should you Buy, Sell or Hold?

Titan Share Price: Titan Company’s stock price zoomed 8 per cent to Rs 2,170.95 on the BSE in Thursday’s intra-day trade after the company said its total sales in the first quarter of fiscal 2022-23 (Q1FY23) grew 205 per cent year-on-year (YoY) led by strong wedding demand and a low base. In Q1FY23, jewellery revenue nearly tripled, clocking a growth of 207 per cent. The Division had a good start to FY23 with robust sales on the auspicious occasion of Akshaya Tritiya in May month after 2 years of Covid-induced lockdowns in this period. Both walk-ins and buyers grew in-line with revenues whereas ticket size marginally improved compared to Q1FY22, Titan Company said in its exchange filing.

Meanwhile, the watches & wearables division achieved its highest-ever quarterly revenue in Q1FY23, growing 158 per cent YoY with healthy growth witnessed across all brands and products. The key channels of Multi-Brand Retail (MBR), Titan World and Large Format Stores (LFS) continued on their growth trajectory from FY22. The wedding season drove demand for all brands in Apr’22 and May’22, it said.

Share Price History

The stock has rallied 11 per cent in the past two trading days, and 19 per cent from its 10-month low of Rs 1,827 touched on July 1 in the intra-day trade. However, in the past three months, Titan has underperformed the market by falling 13 per cent, as compared to 8.5 per cent decline in the S&P BSE Sensex. The stock had hit a 52-week high of Rs 2,768 on March 21, 2022.

At 09:38 am, Titan was trading 6 per cent higher at Rs 2,127.30, as against 0.67 per cent rise in the benchmark index.

What Do Analysts Say?

Despite the robust performance, analysts at Axis Capital have maintained a ‘Reduce’ rating on the scrip. “We expect standalone sales ex-bullion to grow by 207 per cent to Rs 75.7 bn (21 per cent on 3-year CAGR),” analysts said. “Overall standalone revenue is expected to grow by 169 per cent YoY to Rs 87.4 bn; 21 per cent on 3-year CAGR basis with similar 3-year CAGR at EBITDA level,” they added. Axis Capital has a Rs 2,050 per share target price on Titan, which suggests a downside from Thursday’s opening price.

Kotak Securities, taking note of the robust growth in Titan’s business said that even if Titan delivers flat jewellery sales (on-year) over 2Q-4QFY23E, it will end the year with 22 per cent growth. “Titan’s LT attractiveness comes from low market share in a large addressable market and wide gap versus the competition and focus on keeping its lead,” Kotak Securities said while maintaining their ‘ADD’ rating on Titan stock. The brokerage firm has pinned a fair value of Rs 2,400 on the scrip.

Brokerage house Morgan Stanley has kept overweight rating on the stock with a target at Rs 2,621 per share.

Prabhudas Lilladher said: “We are increasing FY23/24 EPS estimates by 16.6 per cent and 13.4 per cent following strong performance by company in 1Q23, first normal 1Q after FY20.”

“The company’s growth strategy is playing out in Jewellery with 1) aggressive store expansion (19 in 1Q) 2) Increased focus on wedding segment 3) focus on lighter Jewellery and 4) designs and campaigns to cater to regional tastes and preferences,” it further added.

Motilal Oswal said: “Titan remains our top pick in the large-cap consumption space in India, with strong earnings growth visibility and compounding by 20 per cent for an elongated period of time. In the Jewelry industry, which is organizing at a rapid space, Titan is clearly at the vanguard among organized players in leading this growth. Its runway for growth is long, with a market share of 6 per cent.”

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