Titan Shares Fall Even As Analysts Raise Target Prices After Q2 Earnings Beat
Shares of Titan Co. declined the most in a week even as analysts raised the target prices after the company's second-quarter net income beat estimates.
Analysts cited jewellery margins, revival in unique buyer growth and cost structure changes for better margins in eyewear and watches segments.
Shares of Titan Co., however, fell more than 4% intraday to Rs 2,470 apiece.
Of the 32 analysts tracking the company, 20 maintain 'buy', seven suggest 'hold' and five recommend 'sell'. The average of analyst price targets compiled by Bloomberg implies a downside of 1.1%.
Maintains 'outperform' rating with the target price increased to Rs 3,000 from Rs 2,780 earlier, an implied return of 24.08%.
Company's jewellery margins surprised positively, aided by cost control measures and better product mix.
Raised FY22 earnings per share by 13% to factor the margin expansion.
Healthy growth rates in the build-up to Diwali and revival in buyer growth with 20% rise in unique customers indicates positive momentum.
Expect EBIT margin to see further expansion due to improvement in jewellery margin
See structural gains in watch segment margins given the high fixed cost nature.
Continued strength in sales and strengthening of hallmarking regulators augur well for company's growth prospects.
Maintains 'neutral' rating with the target price raised to Rs 2,500 from Rs 2,150 earlier, an implied return of 3.43%.
Margin growth across three divisions led to the strong performance in the September quarter.
Exceptionally strong growth due to pent-up demand shifted from Q1 to Q2 due to second wave of Covid-19.
Better mix and operating leverage drove strong jewellery margins.
Cost structure changes aided margin expansion in watches and eyewear segments.
Value the company at 72x September2023E earnings
Titan remains the best-run organised jewellery player in India and is rapidly gaining share from the unorganised market.
Key downside risk: Lack of pick-up in gold demand.
Maintains 'hold' rating with the target price raised to Rs 2,300 from Rs 1,740 earlier, an implied return of -6.51%.
Q2 results were healthy with better margins across the three businesses.
Cost control measures were visible with little two-year change in advertisement and other expenses.
Jewellery business benefitted from a pick-up in sentiment and gained market share.
Raise FY22-24 earnings estimates by 12-19% to factor in strong September quarter revenues and margins, but valuations are already on the higher side.