Multibagger Tata group stock could hit record high post Q2 business update: Buy?
3 min read 07 Oct 2022, 05:42 PM ISTWith a market worth of Rs. 2,42,410.01 crore, Titan Company Ltd. is a large-cap company that operates in the consumer discretionary industry
PremiumWith a market worth of Rs. 2,42,410.01 crore, Titan Company Ltd. is a large-cap company that operates in the consumer discretionary industry. With an upside gap of 5.30% at ₹2,730.20 a piece, Titan Company Ltd.'s shares ended today as the top gainer among the top 5 gainers under the Nifty50 index. In comparison to the 20-Day average volume of 1,133,721 shares, the stock saw a trading volume of 5,284,814 shares today. Titan Ltd.'s stock is close to reaching an all-time high after the firm said that its overall sales climbed 18% year over year (YoY) in the quarter that ended in September (Q2 FY23). According to records on BSE, late investor Rakesh Jhunjhunwala held a 3.98% stake in Titan, or 3,53,10,395 shares, while his wife Rekha Jhunjhunwala held 1.07%, or 95,40,575 shares, of the company for the quarter ended June.
Q2FY23 business update
Titan said its standalone revenue growth of 18.0% in Q2FY23, followed by TEAL with a growth of 139.0% and Caratlane with a growth of 56.0%. Revenues from various segments stood at: 18.0% for jewellery, 20.0% for watches and wearables, 7.0% for eyewear, 58% for other businesses, 139.0% for teal, and 56.0% for caratlane. The company launched 8 new domestic stores in Tanishq, 16 in Mia, and 1 in Zoya. In Q2FY23, the watches and wearables segment saw its best quarterly revenue ever, up 20.0% year over year, with strong growth seen across all brands and products.
During the quarter, this division opened 7 new Titan World, 14 new Helios, and 2 new FastTrack stores. With the addition of 36 new Titan Eye+ stores and 2 new FastTrack prescription stores, the Eyewear division's growth of 7.0% YoY was driven mostly by Titan Eye Plus's (TEP). Fragrances and Fashion Accessories had a 34.0% growth, driven by a 37.0% jump in fragrance sales and a 29.0% upsurge in fashion accessory sales. Taneria saw a 114.0% YoY gain from new store expansion over the previous year and launched 5 new shops during the quarter.
Revenue at Titan Engineering and Automation Limited climbed by 139.0% YoY, with Aerospace and Defense (240%) and Automation Solutions (139.0%). Revenue at Caratlane (a 72.3% owned subsidiary) surged by 56.0% YoY, with solitaries recording the fastest growth across all categories, trailed by studded and gold jewellery.
Should you buy the shares of Titan?
The research analyst of Centrum Broking Ltd, Mr. Shirish Pardesh said “Titan’s Q2FY23 business update point out that company has witnessed standalone revenue growth of 18.0%, while TEAL grew 139.0%; Caratlane grew at 56.0% YoY, driven by (a) festival demand influenced by Navratri, (b) lower gold prices, and (c) network expansion. Interestingly jewelry sales witnessed robust growth of 18.0% despite high base (pent‐up demand and spillover purchases of Covid disrupted Q1FY22). Gold jewelry clocked low double digit growth whereas studded reported higher than overall divisions led by activations along with higher contribution from premiumsiation. In Q2, Titan added 105 stores across divisions/ formats. Watches & Wearables achieved its highest ever quarterly revenue with 20.0% growth. Despite weak start in Jul/Aug, demand recovered in Sept’22 and remained robust given the strong buying occasions such as Navratri."
He further added that “We expect continued uptick in revenues, as the demand is expected to be robust given the strong buying occasions such as Navratri at end Sep’22. Though Q2 started with weak consumer footfall in Jul/Aug due to sharaddh period, Sept’22 saw strong recovery. We believe the continued sales momentum across business divisions would have positive impact on the organized Jewelry retail benefiting players like Titan. In addition, we expect strong demand momentum for Watches and Eyewear to continue given consumer mobility. We retain our earnings and maintain BUY, with a DCF‐based TP Rs2,817 (implying 69.5x FY24E EPS)."
Titan's target price of ₹2,817, which Mr. Shirish Pardesh has set, would be a record high for the stock. On the NSE the stock had touched a 52-week-high of ₹2,768.00 on (21-March-2022) and a 52-week-low of ₹1,825.05 on (01-July-2022), indicating that at the current market price the stock is trading 1.36% below the high and 49.59% above the low. The stock has produced a multibagger return of 116.88% over the past three years, and a multibagger return of 336.73% during the past five years. The stock has appreciated 15.77% over the past year, and on a YTD basis, it has climbed 8.18% so far in 2022.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
