Christmas decorations illuminate a Tanishq jewelry store in Mumbai, India. (Photographer: Santosh Verma/Bloomberg News)

Titan Jumps To Record After Brokerages Give Thumbs-Up To Earnings

Shares of Titan Company Ltd. jumped as much as 10.4 percent to Rs 616 apiece, a fresh high, after the jewellery-to-watchmaker reported first quarter earnings that beat analyst estimates.

The company’s net profit for the April-June period rose 105 percent to Rs 238 crore while sales climbed over 42 percent to Rs 3,308 crore driven by Akshaya Tritiya demand. (Click here for earnings review)

The revenue growth in the jewellery segment is “extremely encouraging” and indicates the strength of the company’s retail and distribution network, brokerage house Nomura said in their report.

Nomura said Titan’s performance in the last few quarters have come as a “surprise”. “We are reviewing both our earnings forecast and target price.”

In fact, IDFC Securities said it expects the company's jewellery division's market share gains to continue driving growth. "We now factor a 22 percent CAGR in earnings for Titan's standalone business (excluding Caratlane and TEAL)."

While earnings are strong, with no significant headwinds, IDFC Securities said, valuations may not provide an upside from current levels.

Global brokerage house Goldman Sachs expects Titan to deliver a 29 percent compounded annual growth rate for EBITDA between financial years 2017 and 2020. They also increased their estimates of Titan’s earnings per share by 2-5 percent for fiscal year 2018-2020.

Ratings Check

  • Remained ‘Neutral’ at Nomura with a target price of Rs 450 (under review)
  • Upgraded to ‘Neutral’ at IDFC with a target price of Rs 559
  • Remained ‘Buy’ at Goldman Sachs and raised target price to Rs 600 from Rs 552
  • Remained ‘Buy’ at Edelweiss with a target price of Rs 613
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