Titan Q3 Results Review: Shares Pare Opening Gains Even As Analysts Say 'Buy'
Here's what analysts have to say about Titan's Q3 FY22 results...
Shares of Titan Co. pared all opening gains even as most analysts reiterated 'buy' ratings on the 'Tanishq' owner citing market share gains, long-term growth opportunities in its key jewellery business, focus on eyewear, among others.
India's largest branded jewellery maker saw its profit jump 91% over the year earlier in the quarter-ended December, beating estimates. That was driven by a strong festive and wedding season demand across its consumer businesses.
Sales in its mainstay jewellery segment, accounting for 90% of total revenue, rose 32.5% year-on-year. Excluding the sale of bullion, jewellery sales rose 37%.
Analysts, however, cautioned about the company's high valuation. Of the 31 analysts tracking, 20 maintain a 'buy', six suggest a 'hold' and five recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 8.7%.
Shares of Titan rose over 1.8% in early trade. The stock pared gains to close with 0.15% losses. The stock's trading volume was nearly two times the 30-day average volume at the time when markets closed Friday.
Here's what analysts have to say about Titan's Q3 FY22 results...
Jefferies
Reiterates 'hold', raises price target to Rs 2,600 from Rs 2,300—an implied return of 5.05%.
Jewellery revenue, as well as margins, surprised positively.
Growth in jewellery was broad-based across wedding, studded and everyday wear.
Regionalisation strategy of winning in focus market aided new buyers growth.
Operating leverage, better product mix led jewellery EBIT margin at a multi-quarter high.
Raises FY22-24 earnings estimates by 7-10% to factor in stronger Q3 revenue and margin.
Price target hiked based on 70x Dec-23E EPS (a premium to historical average).
Current valuation leaves little scope for error.
Morgan Stanley
Reiterates 'overweight/attractive', hikes price target to Rs 2,720 from Rs 2,501—an implied return of 9.90%.
Q3 performance was strong across all parameters, top line, market share gains, margin.
Titan is gaining market share across the country, with the biggest gains in the south and west regions.
Regionalisation strategy has aided in higher new buyer growth.
The management's focus is on driving strong top line growth and market share gains.
Rising focus on store expansion in non-jewellery businesses like eyewear division bodes well for the company.
Prabhudas Lilladher
Reiterates 'buy' but cuts price target to Rs 2,823 from Rs 2,915—still an implied return of 14.43%.
Titan is well placed to capitalise on long-term growth opportunities led by jewellery share gains due to network expansion, omni-channel strategy across jewellery, watches and eyewear, new growth drivers and entry into high growth segments like smart watches.
Estimates 23.5% of PAT CAGR over FY22-24 and remains positive given structural story on account of market share gains, strong balance sheet.
Remains bullish on demand momentum at least till April.
Extended gains in market share across geographies aided by network expansion, regional thrust, regional specific campaigners
Emkay Global
Reiterates 'buy' but cuts price target to Rs 2,900 from Rs 3,000—still an implied return of 17.17%.
Store additions in eyewear segment have been particularly strong.
Strong performance aided by buoyant jewellery demand during the festive season, new customer acquisitions, regionalisation strategy.
Strong growth visibility and a healthy improvement in the profitability of eyewear/Caratlane businesses augurs well for the company.
Potential share gains from the regionalisation strategy can offer more upside.
Margins are helped by operating leverage in the jewellery business.
Edelweiss Securities
Maintains 'buy', hikes target price to Rs 3,065 from Rs 2,867—an implied return of 23.05%.
The company reported another exceptional quarter with strong growth and product mix driving a multi-quarter high margin.
Store addition, traction in wedding jewellery and new buyer growth in focus markets are the key positives.
Increases FY22/23EW Ebitda by 10%/7%.
Maintains the target multiple of 65x FY23E Ebitda, which yield a revised target price of Rs 3,065.
Titan continues to be a compelling structural story despite the fact that the double-digit revenue growth may moderate.
There is further room for scope for penetration has Titan still makes up hardly 15%/6% of the organised/total jewellery market.
Key Risks: Gold price volatility, muted market share gains.
ICICI Securities
Maintains 'add' with a target price at Rs 2,750—an implied return of 10.46%.
Titan is one of the very few managements that look able to translate growth opportunities to reality (and free cash flows).
Q3 performance driven by buoyancy in jewellery demand, formalisation, market share gains in the south.
The merits of jewellery hallmarking and government's intent on this is under-appreciated.
Expensive valuations are likely to limit near-term upsides though.
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