Titan Shares In Focus As Bernstein Initiates Coverage With 'Outperform'; 15% Upside Seen On Growth Outlook
Titan's international jewellery and the Indian eyecare business segments of Titan offer longer term incremental growth opportunities, Bernstein said.
Titan share price in focus: Bernstein initiated coverage on Titan Co. Ltd. with an outperform rating and Rs 4,200 target price, which implied 15.1% upside from Monday's close. The brokerage eyes an untapped growth opportunity for the lifestyle brand.
Titan is well-laced to capture the growth amid formalisation and contemporisation of jewellery in India, the brokerage said in a note. Titan started as a watch maker and expanded into jewellery business, and now aims to become a global lifestyle brand, the company said in the exchange filing.
Gold adulterations and government regulations are driving push towards organised players. Increasing preference for 'daily-wear' jewellery needs lighter stock-unit keeping and contemporary designs, Bernstein 6said.
The peers have grown at a faster pace, but Titan still has a large room to grow. Bernstein counted the advantages of the lifestyle brand. It has brand strength which will give it a better pricing power. The company has also seen a large product range, supply chain, and franchise ecosystem.
Bernstein believes that Caratlane is an under-appreciated asset given its products and omnichannel positioning towards evolving consumer trends.
Out of Titan's total revenue and Ebitda, 89% is from the jewellery segment, Bernstein said. The stock is trading at a five-year low price-to-earning ratio due to three controversies despite having a track record of delivering 23% earning per share CAGR for two decades.
Natural dimond and lab-grown diamonds dynamics threaten its studded jewellery sales which provided higher margin. This is a key long-term risk. Itn expects that Titan will likely have two three years of muted sales.
Bernstein is also expecting that demand stress will likely persist given the rally in gold prices. Price stability in the bullion in upcoming two-to-three quarters should revive growth Titan leading share gain.
International jewellery and the Indian eyecare business segments of Titan offer longer term incremental growth opportunities in case executed well, Bernstein said.
