1:10 Split: Tata's Gems & Jewellery Stock Rises 54,103% In Longest Run; Motilal Says Buy For Rs 4,300 TP

Titan Company, the shining star of Tata Group, was in focus due to the Nifty indices rejig. The largest conglomerate's gems & jewellery company is included in Nifty100 Low Volatility 30 with effect from March 28, 2024. On Thursday, brokerage Motilal Oswal recommended buying Titan shares due to its glittery track record and long for growth.

Titan Company, the shining star of Tata Group, was in focus due to the Nifty indices rejig. The largest conglomerate's gems & jewellery company is included in Nifty100 Low Volatility 30 with effect from March 28, 2024. On Thursday, brokerage Motilal Oswal recommended buying Titan shares due to its glittery track record and long for growth.

According to Motilal's latest note, the demand for jewellery has remained steady, but gold inflation has led to a delay in demand.

Motilal pointed out that Titan is focusing on expanding its store network and improving execution at existing stores. Further, Titan has reduced the gold premium compared to peers and believes it can sustain a 12-13% EBIT margin.

Also, the brokerage cited that Titan is cautious about participating in lab-grown diamonds. Meanwhile, the leader in the gems & jewellery segment, further expects to sustain healthy growth due to the increasing urban population, rising consumer base, and changing consumer preferences.

Moreover, Titan has a consumer-centric approach and multiple jewellery brands to cater to different income groups. While the company's studded ratio and margin profile are healthy compared to peers. Adding the brokerage's note said, " The company is also expanding into other lifestyle categories."

Thereby, Motilal Oswal's analysts project a CAGR of 17% in revenue, 23% in EBITDA, and 26% in PAT during FY24-26. The note added, " Titan's valuation is rich, but its competitive positioning and business moats are not easily replicable."

Motilal's analysts maintain a BUY rating with a target price of Rs 4,300 on Titan shares, based on 65x FY26E EPS.

Currently, Titan's share price is at Rs 3804.75 apiece, up by 1.2% after market hours of March 28, 2024, on BSE with a market cap of Rs 3,37,780.44 crore.

In FY24, Titan shares have zoomed by 51.27% on BSE. The stock was near Rs 2,515 levels by the end of March 2023.

Further, in 5 years, the stock has skyrocketed by 233.56%, while its all-time gains are massive by 54,102.86% since mid-1995. Titan's share price has adjusted due to 1 stock split that it carried nearly 14 years ago.

So far, Titan has carried only 1 bonus issue and 1 stock split.

Bonus issue: The first bonus issue was of ratio of 1:1 with effect from June 23, 2011. This means Titan issued 1 stock as a bonus on the existing 1 stock.

For example, if you held 1,000 shares of Titan before June 23, 2011, your share price doubles to a total of 2,000 shares as you receive another 1000 bonus shares.

Stock Split: Titan also went ex-split on June 23, 2011, for the ratio of 1:10. This means that the face value of Rs 10 was trimmed to Rs 1/

Taking into consideration that Titan shares doubled due to the 1:1 bonus issue. Further, the stock multiplied by 10 times due to its stock split. 2,000 shares of Titan rise to 20,000 shares (2,000 X 10). This is just an example.

Apart from this, Titan also has a strong track record of paying dividends to shareholders. As per Trendlyne data, the company delivered up to 23 dividends since July 2001. Last year, the company paid dividends up to Rs 10 per share.

Titan (Consolidated) recorded an income growth of 24% in Q3FY24 compared to Q3FY23. PAT meanwhile stood at Rs 951 crore, up by 9.4% YoY.

Titan Company is a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation (Tl DCO), which commenced its operations in 1987 under the name Titan Watches Limited. Over the last three decades, Titan has expanded into underpenetrated markets and created lifestyle brands across different product categories including fragrances (SKINN), accessories Indian dress wear (Taneira) and thoughtfully designed Women's Bags (IRTH). Titan is widely known for transforming the watch and jewellery industry in India and for shaping India's retail market by pioneering experiential retail.

Titan shares will be in focus from April to May month due to its operational performance announcement for Q4FY24, followed by quarterly and full-year earnings for FY24.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.