Shares of Titan Co. Ltd. surged after analysts said its initial first-quarter trends hint at broad-based year-on-year growth across segments, led by jewellery.
The nation's largest branded jewellery maker saw its sales jump threefold over the year earlier on a low base and demand revival in the April-June quarter. “Q1 FY23 was a near-normal first quarter after a gap of two years,” the company said in its quarterly business update released on the bourses on Wednesday.
Its mainstay jewellery business grew 207% over the previous year, followed by eye care and watches and wearables. Titan commissioned six new domestic stores of Tanishq and 13 of Mia.
The watches and wearables division logged its highest ever quarterly revenue in Q1 FY23. The company opened 26 new stores of Titan World and 15 of Helios.
Shares of Titan gained as much as 7.85%, the most in nine months in intraday trade. The stock trimmed gains and closed 5.66% higher, the best in over two weeks since June 21.
Of the 31 analysts tracking the company, 21 maintain a ‘buy', six suggest a ‘hold' and four recommend a ‘sell', according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 19.9%. The stock's trading volume was nearly thrice the 30-day average when markets closed on Thursday.
The stock has dropped more than 16% so far in 2022 against a 6% decline in the Sensex.
Here's what analysts have to say about Titan's first-quarter updates:
Morgan Stanley
Reiterates ‘overweight/attractive' with target price at Rs 2,621 apiece, an implied return of 30.17%.
Initial Q1 trends hints at broad-based YoY growth across segments, led by jewellery.
Overall share in jewellery division remains stable despite weakness in wedding demand.
Emkay Global
Reiterates ‘buy' with target price at Rs 2,530, an implied return of 19.40%.
The strong performance, as inferred from Q1 update, should drive an upgrade to consensus estimates.
Q1 update suggests a three-year consolidated revenue CAGR of 22%.
Sees improvement in the studded mix and operating leverage to lead to 800 bps YoY improvement in Ebitda margins to 12%.
Estimates a consolidated PAT of Rs 730 crore in Q1 versus Rs 20 crore YoY.
Motilal Oswal
Reiterates ‘buy' with target price at Rs 2,900, an implied return of 36.86%.
The company witnessed strong demand across its consumer business in Q1. Revenue more than tripled over last year's low base.
Strong demand on Akshaya Tritiya and due to wedding season aided the strong performance in the jewellery segment.
Remains the top pick in large-cap consumption space in India, with strong earnings growth visibility and compounding by 20% for an elongated period of time.
Titan is clearly the vanguard among organised players in the jewellery industry.
Structural investment case for Titan is intact.
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