Reported Double-Digit Growth Across Businesses, Buy This Multibagger Tata Group Stock For 9% Gains

Motilal Oswal maintains a buy call to Titan Company Limited for a potential upside of 9% with a target price of Rs 2,970/share. Titan is a Large Cap Tata Group company (having a market cap of Rs 242,410.01 Crore) operating in Gems and Jewellery sector. Titan released its pre-quarterly update for 2QFY23.

Overall standalone sales are expected to grow at 18% YoY in 2QFY23. The company added 105 stores in 2QFY23. The management said it is experiencing positive consumer sentiments across categories during the current festive season.

Stock Outlook & Returns

On Friday, the current market price of the stock stood at Rs 2,730.50/share on NSE. The stock is currently trading near its 52-week high, which is Rs 2,768, recorded in March 2022. Its 52-week low is Rs 1,825.05.
 
The stock has given 4.74% positive returns in the past 1 week. In the past 3 and 6 months, the stock surged 28.34% and 11.07%, respectively. It has given 14.95% in the past 1 year and 116.88% in the past 3 years. It gave a multibagger return of 357.68% in the past 5 years. The stock has given good returns in 3 years as compared to the Nifty 100 which gave a return of 57.16%. 

 

Jewelry division

• The Jewelry division grew 18% YoY over a high base. 
• Gold jewelry (plain) clocked a low double-digit growth, whereas sales of Studded jewelry were higher than that of the overall division. 
• The product mix improved YoY, but is still below pre-pandemic levels. 
• New store commissions (net) comprised of eight domestic stores in Tanishq, 16 in Mia by Tanishq, and one in Zoya.

Watches and the Wearables division

This division grew 20% YoY, clocking its highest quarterly revenue in 2QFY23. 
Demand was led by a strong desire to own premium and differentiated Watches, assisted by higher volume and average selling prices YoY. 
It launched Titan and Fastrack smart watches, with a Bluetooth calling feature in 2QFY23. 
It added seven stores of Titan World, 14 of Helios, and two in Fastrack.

 

Eyecare division

• Titan Eye+ grew in healthy double-digits YoY. However, lower trade and distribution sales led to the overall division growing by only 7%. 
• It added a net of 36/two stores of Titan Eye+/Fastrack prescription stores.

Other businesses (Fragrances and Fashion Accessories or F&FA and Indian Dress Wear)

• F&FA grew 34% YoY on the back of a 37%/29% growth in Fragrances/Fashion Accessories. 
• In offline channels, LFS grew faster as compared to Trade. Both channels clocked higher growth than the overall division. 
• Taneira grew 114% YoY. New stores opened in FY22 contributed meaningfully. It opened five new stores in 2QFY23.

Key subsidiaries

Titan Engineering & Automation (TEAL) (a wholly-owned subsidiary) - TEAL grew 139% YoY, with the Automation Solutions division growing 240% YoY and the Aerospace and Defense division clocking 66% growth.

CaratLane (72.3% owned) - CaratLane grew 56% YoY, led by promotions around Raksha Bandhan and hero launches in 2QFY23. As a category, solitaires grew the fastest, followed by studded and gold jewelry. The Studded segment constitutes ~70% of the business, despite a larger base.

Valuation and view

Motilal Oswal Said, "Earnings growth visibility for TTAN remains strong. It has compounded earnings by ~20% for an elongated period of time. In the Jewelry industry, which is organizing at a rapid space, it is clearly at the vanguard in terms of growth among organized players. Its runway for growth is long, with a market share of ~6%. Unlike other high-growth categories, the competitive intensity from organized and unorganized peers in Jewelry is considerably weaker. The structural investment case for TTAN is intact. We maintain our Buy rating with a Target Price of INR2,970."

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal. 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 making any investment decision.