Stock Outlook & Returns
The current market price of the stock after Friday’s close is Rs 2432.80 apiece. The stock is currently trading Rs 669.6 above the 52 week low of Rs 1763.20 a piece, which was recorded last year in August. It is trading Rs 335.2 below the 52 week high of Rs 2768, which was recorded in March 2022.
Over the past week, the shares of the company gained 3.43% and 24.49% in the past 1 month, respectively. Whereas, in the past 1 year, the stocks moved up by 25.21% and 134.65% in the past 3 years. In past 5 years, it has given a multibagger return of 298.04%.
Titan reported a healthy operational performance with a strong beat on the margins front. Buoyed by strong festive/wedding season and a normalized quarter after a gap of two years, the jewelery division registered its second highest ever quarterly revenues in Q1FY23.
As guided by the management in its pre-quarterly update, the jewelery division (excluding gold bullion sale) reported robust sales growth of 204% YoY to Rs 7995 crore (impressive three year CAGR: 24%). Watches segment reported 169% YoY growth to Rs 786 crore (110% of pre-Covid levels), whereas eyewear division reported 173% YoY growth to Rs 183 crore (123% of pre-Covid levels). Overall consolidated revenues (including gold bullion sale: Rs 356 crore) grew 172% YoY to | 9443 crores.
Improvement in studded ratio and positive operating leverage led to robust EBITDA margins (up 870 bps YoY to 12.7%). Absolute EBITDA was at | 1196 crore with robust three year CAGR of 28%.
Key triggers for future price performance
Robust balance sheet and asset light distribution model has enabled it to outpace peers in terms of store addition (to add 40+ Tanishq stores in FY23). Aspires to grow jewelery revenues by 2.5x by FY27 (implied CAGR: 20%). Huge headroom for growth with current market share at ~6% in Rs 4 lakh crore market. Thrust on the wedding space is bearing fruit with wedding jewelery becoming a critical growth driver while its share in overall jewelery revenue has increased meaningfully. Gradual recovery in studded ratio to aid gross margins, going forward.
ICICI Direct Recommends Buy for a target price of Rs 2800
Titan has been an exceptional performer in the discretionary space with stock price appreciating at ~32% CAGR in the last five years. “We continue to remain structurally positive on the stock as high growth visibility justifies premium valuations and maintain BUY on the stock. We value Titan at Rs 2800 ie 66x FY24E EPS,” the brokerage has said.