Mumbai: Shares of Titan Co. Ltd on Monday surged as much as 25%, its biggest jump since 12 years, to hit a record high as brokerages upgraded the stock and increased its target price after the company reported robust earnings.
Shares closed 18.98% higher at Rs784.55 on BSE, while the Sensex rose 0.14% to close at 33,731.19 points. During the day, the stock hit an all-time high of Rs823.30, up 24.86%—its maximum gain since 31 October, 2005.
Titan gained for the seventh consecutive session and rose 41% in this period. So far this year, it has gained over 135%.
Other jewellery stocks also gained. PC Jeweller added 6%, Gitanjali Gems Ltd 5%,Tribhovandas Bhimji Zaveri Ltd 6.6%, Rajesh Exports Ltd 1% and Thangamayil Jewellery Ltd 4%.
The company reported a 67.44% jump in its September quarter net profit to Rs277.93 crore from Rs165.98 crore a year ago. Total revenue increased 29.56% to Rs3,517.70 crore from Rs2,714.98 crore a year ago.
Analysts believe that the early onset of the festival season, higher primary sales, strong sale of wedding jewellery, sale of premium products, some benefits of goods and services tax (GST) and operating leverage were key reasons for the robust growth.
“We continue to like Titan because jewellery industry will see a tectonic shift from unorganised to organised sector over the next five years, and Titan being the market leader among organised players will be a key beneficiary, the company’s focus on wedding market will boost growth in jewellery segment, and regulatory issues are largely resolved," said ICICI Securities, in a note to its investors.
The brokerage house has upgraded the stock to “add" with a revised target price of Rs674 a share.
Its jewellery segment reported revenue growth of 36.4% year-on-year with grammage growth of 49% from a year ago, while watch business performance improved with revenue growth of 8.8% and volume growth of 15% in domestic operations. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin expanded 200 basis points.
“Strong sales growth in jewellery (despite a few one-offs constraining business growth) points to the sheer magnitude of value migration happening in the Indian jewellery market," said Motilal Oswal in a report.
“Regulations governing the segment, including identity proofs for all transactions over ₹ 200,000, GST implementation and crackdown on black money, have tilted trade decisively in favour of organized players, among which Titan is a dominant player in terms of scale and trust. Recent aggression to capitalize on the massive opportunity is also heartening," the report added. The brokerage house has upgraded the stock to “buy" with a target price of ₹ 50 a share.
Of the 30 brokers tracking the Titan stock on Bloomberg, 22 recommended a “buy" rating, three asked its investors to “sell" the stock and five have a “hold" rating.