Prabhudas Lilladher has given Buy recommendation for Titan Company with a target price of Rs. 2754 in its research report issued on Apr 06, 2022

Prabhudas Lilladher’s research report on Titan Company

We are cutting FY22/23/24 EPS estimates by 2.1/2.7/6.0% following slower than expected demand trends across Jewellery, watches and eyewear. 4Q sales were impacted by 1) 3rd wave impact in January 2) higher gold price impact on volumes in Feb and 3) impact of geopolitical uncertainty in March. Lower sales growth in watches and eyewear was a bigger surprise. However, excluding the one of impact from large order in base quarter and exceptionally strong 4Q21 sales, 28% CAGR over 2 years for jewellery sales remains positive. Our channel check suggests that industry sales were down by 50-60% QoQ and Tanishq has gained share given structural tailwinds. Diamond prices are firm and jumped by 40% in past few months, we expect Diamond prices to remain firm given that Russian supply will not be available. We expect jewellery business to sustain strong margins due to inventory gains in diamond in 4Q and 1Q23 as well.

Outlook

TTAN is well placed to capitalise on LT growth led by 1) benefit of hallmarking 2) Omni-channel strategy across jewellery, watches and eyewear and 3) new growth drivers like Caratlane, Titan Eye+, Taneira, and 4) entry into high growth segments like headphones and Truly Wireless earphones. We estimate 21% PAT CAGR over FY22-24 and arrive at a DCF based target price of Rs2754 (Rs2832 earlier). Although structural story remains intact, expect back ended returns given rich valuations of 65.4xFY24 EPS. Retain Buy.

More Info

At 14:25 hrs Titan Company was quoting at Rs 2,468.45, down Rs 72.80, or 2.86 percent.

It has touched an intraday high of Rs 2,546.50 and an intraday low of Rs 2,457.40.

It was trading with volumes of 118,699 shares, compared to its thirty day average of 58,120 shares, an increase of 104.23 percent.

In the previous trading session, the share closed down 0.26 percent or Rs 6.70 at Rs 2,541.25.

The share touched its 52-week high Rs 2,767.55 and 52-week low Rs 1,400.65 on 21 March, 2022 and 04 May, 2021, respectively.

Currently, it is trading 10.81 percent below its 52-week high and 76.24 percent above its 52-week low.

Market capitalisation stands at Rs 219,145.57 crore.

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