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This Tata Group Stock Can Rally 30%, Feels Motilal Oswal
Broking firm, Motilal Oswal has recommended buying the stock of Titan Industries. The firm believes that the stock can rally as much as 30% from current levels.
Quarterly numbers in line
According to Motilal Oswal, Titan Company 3QFY23 result was in line on sales front but lower-than-estimated EBITDA margin (lower-than-usual domestic jewelry sales leading to reduced operating leverage) meant that EBITDA missed our estimate by 11%. "Base quarter EBITDA margin was the highest since 2QFY06 and hence, there was an unusually unfavorable base, which will not be the case going forward though. The three-year consolidated Sales/EBITDA/PAT CAGR remained robust at over 20% each in 3QFY23," the report has noted.
Buy the Titan stock with a target price of Rs 3070
As highlighted in our detailed management meet note in Dec'22, the outlook remains robust, Motilal Oswal has said in its report. "Titan has a strong runway for growth, given its market share of sub-10% in Jewelry and continued struggles faced by its unorganized and organized peers. Its medium-to-long-term earnings growth visibility is nonpareil. Maintain BUY with a target price of Rs 3,070 (premised on 55xFY25E EPS)," the brokerage has said.
What the management of Titan is saying?
According to the Motilal Oswal report, Jan'23 is witnessing robust jewelry demand despite high gold prices since Dec'22. Even adjusted for Omicron in the base, the three-year CAGR in Jan'23 is even better than 3QFY23 three-year CAGR. The management is hoping that it will fare further better in the next couple of months. According to the management, there are two reasons why Titan is not witnessing the adverse impact of the recent slowdown in urban discretionary consumption. This makes them confident of growth in 4QFY23 and FY24 as well:
1) Consumer segments from which Titan's demand emanates are not hit by the travails of inflation, and
2) Relationships that Titan has built across all its businesses.
Disclaimer
The stocks is picked from the brokerage report of Motilal Oswal. The above-mentioned information is purely informational. Greynium Information Technologies, the Author and the 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.
