This Tata Group Stock Grew 319.5% In 5 Years, Buy For 19% Returns, Says Hem Securities

Hem Securities has recommended 'buy' Titan Company Limited for a target price of Rs 3,104 per share, for a potential upside of up to 19% in 12 months. Titan Company is a Gems & Jewellery sector company of Tata Group. It is a large-cap company having a market cap of Rs 2,33,043 crores.

Stock Outlook & Returns

The current market price (CMP) of the Titan Company's stock on the NSE is Rs 2,625 per share. Its 52 week low level is Rs 1,825.05, and its 52 week high level is Rs 2,768, recorded, respectively.
The stock in the past 1 week has given 2.06% negative return. Over the past 3 months, it has given 19.88% positive return. The stock in the past one year has given 2.38% positive return. It has given 105.55% multibagger return, whereas, in the past 5 years, it has given 319.5% multibagger return on investments.

Result Overview

Titan Company Q1FY23 consolidated revenues came in at Rs 9,443Cr, up 172% YoY and 21.13% QoQ. PBIDT for Q1FY23 stood at 1,240Cr, up 578% YoY and 52% QoQ. PBIDTM for Q1FY23 came at 13.13%, 786 bps YoY and 266 bps QoQ. PAT for Q1FY23 stood at Rs 790 Cr, up 4288% YoY and up 49.9% QoQ. 

Management Commentary

Company's market share in jewellery was ~6%. Have a pipeline of 30-40 Tanishq stores for FY23, however, if good locations are available this could go up to 50. The company aims to achieve consistent double-digit revenue growth over the next five years by strengthening core businesses such as watches, jewellery, and eyecare through efficient capital allocation. 

Segment Analysis - Q1 FY23 Revenue Breakup: Jewellery (87%), Watches (8%), EyeCare (2%), Others (3%). 

Other Development - Going forward, the contribution of international operations is expected to increase over the next 2-3 years on the back of expansion in both GCC and the US. 

Concall Summary

Sales during the Akshaya Tritiya quarter rebounded strongly after a 3-year gap. Q1FY23 growth was driven by both buyer and ticket sizes, with new buyer contribution of 46%. The wedding season worked really well for all brands and channels especially in April and May. The company added net 24 jewellery stores (including CaratLane) in Q1 FY23, this includes 3 stores in GCC (Gulf Cooperation Council). Prescription eyewear retail by Fastrack, a new initiative by Titan EyeCare, expanded the reach with addition of 2 new brand stores in Bengaluru. Division achieved its highest quarterly revenues of Rs 183 cr in Q1FY23 led by growth in all its major categories.

Valuation & Outlook

According to the brokerage, the company is aiming to generate revenue CAGR of over 20% during FY2022-FY2027 led by an ambitious growth plan coupled with consistent margin improvement will help in improving cash flows in the coming years. FY2023 will be a strong year for the company due to low base in its core businesses. Sustained market share gains without compromising on the balance sheet strength has led to multiple expansion over the last couple of years. 

"With a strong growth outlook, we initiate a "BUY" rating on the stock and value the stock at 31.7xFY23 EPS to arrive at the target of 3,104," the brokerage said. 

Disclaimer

The stock has been picked from the brokerage report of Hem Securities. 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.