Titan Company Q4FY23 results: Should you buy this Tata Group stock? Here's what brokerages say
Titan Q4FY23 Earnings: For the quarter that ended in March, consumer goods major reported a standalone net profit jumped 50% to ₹734 crore, from ₹491 crore reported for the same period last year.
PremiumTata Group's Titan Company Ltd reported its Q4FY23 (January-March) earnings results on Wednesday, which mostly met street's expectations due to strong performance across all major segments (except eyewear).
For the quarter that ended in March, consumer goods major reported a standalone net profit jumped 50% to ₹734 crore, from ₹491 crore reported for the same period last year.
For the reviewed quarter, revenue from operations rose 33% to ₹9,704 crore. In the same period a year ago, it was ₹7,276 crore.
A dividend of ₹10 per equity share has been recommended by the board.
Titan Q4 Results: Net profit up 50% to ₹734 cr, dividend declared
The management highlighted that, following a dip in demand in March and April due to a surge in gold prices, the demand situation has improved as of the end of April. The management is still optimistic that it would grow 20% CAGR over the following five years.
Shares of Titan Company Ltd gained over 1% on Thursday's trading session following the Q4FY23 results. According to analysts, overall, the stock is in uptrend and post result there's no major traction, but they expect prices to gradually move towards ₹2750, and the support level is at ₹2,580.
In response to the Q4FY23 earnings results, four brokerages have recommended a 'buy' rating for the stock. Let's look at what they have to say.
Motilal Oswal Financial Services Ltd
The brokerage stated in its analysis that Titan's Q4FY23 revenue was almost 19% more than expected. However, adjusted profit after taxes (PAT) and earnings before interest, taxes, depreciation, and amortisation (EBITDA) were in line with expectations due to a lower-than-anticipated margin.
The impact of various actuarial calculations and a one-time clean-up of old inventory in the eyeglasses industry (mostly old lenses) had a negative impact on the margins.
“The company boasts of an outstanding track record that surpasses its peers, with superior short-term growth prospects, and exceptional long-term growth potential, all of which justify its high valuations. We reiterate our ‘buy’ rating with a target price of ₹3,080," said the brokerage in its report.
Nuvama Institutional Equities
According to the brokerage's analysis, the company recorded an in-line performance, with the jewelry margin of 13% serving as the major positive, especially in light of the miss in Q3FY23.
Demand was hampered by the fluctuating gold price in March, which continued into the first half of April, but has since recovered after the holiday season (Akshay Trithiya). Similar to January-February of '23, management anticipates that the next wedding season in May-June would help growth.
"Valuing the stock at 60x FY25E PE, in line with its five-year average, leads to a revised target price of ₹3,218 (earlier ₹3,290). We expect Titan to clock among the highest growth in the consumer space driven by market share gains and relative resilience of the customer segment it serves. Accordingly, Titan remains one of our top picks," said the brokerage.
Antique Stock Broking Ltd
The company, according to the brokerage, had an impressive quarter, largely due to robust demand in the jewellery and watch divisions.
With the establishment of 38, 12, and 52 stores of eyewear, tanishq, and watches, respectively, in 4QFY23, the firm continued with its accelerated network expansion, bringing the total number of stores to 896, 423, and 1,005 as of March 2023.
"Factoring 4QFY23 performance, we marginally tweak our FY24-25E EPS estimates. We roll forward to FY25 arriving at a revised target price of ₹3,147," said the brokerage.
PhillipCapital (India) Pvt Ltd
According to the brokerage, long-term drivers continue to include: (1) shifting consumer preferences towards organised jewellery as unorganised jewellers struggle to remain in business due to rising compliance costs (2) aggressive competition in the extremely lucrative wedding jewellery market, and (3) growing interest in the revised gold exchange programme for Titan's Golden Age. 4. A strict cost-efficiency programme. 5. Network growth in Tier 2 and Tier 3 markets with a focus on market leadership.
"We have cut our FY24-25 EPS estimates by 6-10% to account for increased competitive intensity on gold rate front, diamond inventory gains no longer being available over FY24-25 and, higher volatility in gold price which will eventually lead to deferment of demand. We continue to remain cautiously optimistic with target price of ₹3,000 as structural levers remain intact despite near term concerns," said the brokerage.
Further, global brokerages too have recommended positive ratings on the back of company's positive Q4FY23 earning performance.
While, Macquarie has a ‘outperform’ call with a target price of ₹3,200, JPMorgan has assigned an ‘overweight’ rating and set a target price of ₹3,000 per share. Titan gets a ‘buy’ rating from CLSA with a target price of ₹3,210.
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