Buy This Tata Stock For 20% Gains, 1QFY23 Reports Bumper Sales, Given 300% Returns In 5 Years

Prabhudas Lilladhar in its report on Titan Company Ltd has given a buy rating for a target price of Rs 2,520 apiece. Titan Company is a large-cap Tata Group company with businesses in jewellery, Eyewear, watches, and other luxury brands. The eyewear business is gaining scale and growth prospects in this large but highly organized segment look encouraging. Watches and wearables growth will be led by a significant revamp of WOT distribution and the emerging wearables segment.

Stock Outlook

Today, Titan Company's share opened at Rs 2,132 apiece, currently, trading at Rs 2,125.65 apiece. The Current Market Price of the stock is Rs 463.15 above the 52-week low level of Rs 1,662.50 apiece. Its 52-week low was recorded on 20th June 2022. Its 52 wee high is Rs 2,768 apiece, recorded on 21 March 2022.

The stock has the potential to jump 20% in 12 months, according to the estimated Target Price of Rs 2,530 apiece & the CMP of the stock.
The Return on Equity (ROE) is 23.35%. PE ratio is 87.05. The P/B ratio is 20.27. TTM EPS is Rs 24.48.

The stock price of Titan has moved up 10.25% in past 1 week. It has given 25.75% in last 1 year and 97.23% in past 3 years. It has given multibagger returns of 299.29% in the last 5 years.

 

1QFY23 reports bumper sales on a low base

Jewelry business - Jewelry revenues grew by 207% YoY after 2 years of COVID lockdowns in 1Q21/22 coupled with the auspicious occasion of Akshaya Tritiya in May'22. Both walk-ins and buyers grew in-line with revenues whereas ticket size marginally improved compared to Q1FY22. Plain gold jewelry grew ~3x whereas studded sales was comparatively higher YoY. Studded mix was better YoY and comparable to pre-COVID levels. Weddings growth was slightly lower YoY compared to revenue growth but the share in the overall pie continued to be stable. Retail metrics of sales growth, walk-ins, conversions and jewelry mix including studded ratios continued to be healthy across all international stores. Added 19 stores (net) during 1Q23 taking store count to 463.

Other Business Updates

Watches & Wearables Business - Watches & Wearables Revenues grew by 158% YoY led by healthy growth witnessed across all brands and products. Key channels of Multi-Brand Retail (MBR), Titan World and Large Format Stores (LFS) continued their growth trajectory from FY22. Wedding season worked well for all brands and channels especially in April and May. Wearables grew ~5x YoY on a low base while momentum of H2FY22 carried into 1Q23. Added 39 stores (net) during 1Q23 taking store count to 882.

Eyewear Business - Eyewear Revenues grew by 176% YoY led by both Titan Eye Plus (TEP) and Trade & Distribution channels. Make-in-India' Rx lens and frames production capacity continues to ramp up. Added 56 stores (net) during 1Q23 taking store count to 789. Targets 1,000 TEP outlets by FY23.

Fragrances/Fashion Accessories/Indian Dress Business - Fragrances/Fashion Accessories/Indian Dress wear grew at 262%/293%/608% YoY. Growth in Trade, LFS and E-commerce channels contributed to a 271% yearly increase for the division. Taneira added 6 stores (net) during 1Q23 taking store count to 26.

TEAL- TEAL Revenues grew by 35% YoY with Automation Solutions (AS) and Aerospace and Defence (AD) growing in-line with the overall Revenues. AS business had a low double-digit decline in order inflows during 1Q vs last year. AD business had 2x+ vs 1QFY22 signaling healthy signs of revival for the sector. Overall order inflow growth for TEAL was in mid-teens.

Carat lane- Carat lane saw very positive consumer sentiment which helped achieve its highest ever sales on the day of AT (20% higher than Dhanteras of 2021).

Prabhudas Lilladhar Retains Buy For A Target Price Of Rs 2,520/share

The brokerage said, "We are increasing FY23/24 EPS estimates by 16.6% and 13.4% following strong performance by Titan in 1Q23, first normal 1Q after FY20. TTAN growth strategy is playing out in Jewellery with 1) aggressive store expansion (19 in 1Q) 2) Increased focus on wedding segment 3) focus on lighter Jewellery and 4) designs and campaigns to cater to regional tastes and preferences. Eyewear business is gaining scale and growth prospects in this large but highly organized segment look encouraging. Watches and wearables growth will be led by significant revamp of WOT distribution and emerging wearables segment."

The brokerage added, "We believe new businesses like Wearables, Taneria (Distribution and product range led), Carat lane will continue to gain traction. We estimate 1Q sales and PAT growth of 166% and 1137% although these numbers can't be extrapolated. We estimate 34.4% PAT CAGR over FY22-24 and arrive at a DCF based target price of Rs 2520 (Rs2701 earlier, impacted by higher Risk free rate). Although structural story remains intact, expect back ended returns on our target price given rich valuations of 47.8xFY24 EPS. Retain BUY."

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladhar. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.