Titan gains on robust Q4 show, Morgan Stanley, CLSA see up to 20% upside

With rising consumer interest for BIS, hallmarked jewelry and industry formalization showing up in market share gains for Titan. Though the turnaround in the Caratlane, watches, and eyewear divisions and continuity in their profitability potential need to be watched.

Shares of Titan Company advanced over a percent to Rs 3,808 on April 8 as brokerages remained bullish after the Tata Group firm reported robust performance in the fourth quarter of FY24, marked by significant revenue growth and expansion of its retail footprint.

Titan achieved a revenue growth of approximately 17 percent on-year. The addition of 86 outlets further bolstered its retail network, which now stands at 3,035 stores. Analysts see up to 20 percent upside in Titan stock from its April 5 closing price.

According to Centrum Broking, despite fierce competition in jewellery, Titan is expected to maintain the operating margin, given its competitive edge in design and sourcing and higher ticket size with further improvement in studded ratio.

With a strong pace of growth momentum and focus on improving wedding sales contribution in the south, the brokerage remains positive on Titan and maintains a 'buy' rating on the stock with a target price of Rs 4,255 per share, implying a 58.1x FY26 EPS.

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Titan reported a remarkable 19 percent growth in the India Jewellery business, contributing to improved topline growth. Both buyer and same-store sales growth in the jewellery division achieved double-digit expansion. Watch sales, meanwhile, saw a 6 percent on-year rise, following a significant 21 percent growth in the previous quarter.

Titan's eyecare revenue, although declining by 1 percent from the previous year, reflects a steady five-year CAGR of 5 percent, similar to Q3. Emerging businesses recorded a 24 percent YoY growth, with Caratlane sales soaring 30 percent. Following the robust business update, Morgan Stanley has maintained an 'equal-weight' rating on Titan with a target of Rs 3,290 per share.

Analysts at CLSA also have a positive outlook on Titan. They anticipate a robust standalone revenue growth of 17 percent year-on-year, surpassing consensus estimates of 11.2 percent. Specifically, the jewellery segment is projected to achieve an 18 percent YoY growth, slightly exceeding CLSA's estimate.

Conversely, watches and wearables are forecast to grow 6 percent YoY, while eye care is expected to contract 1 percent.

Also Read | Titan Q4 update: Revenue rises 17% YoY, firm adds 86 stores

The emerging business segment is anticipated to record a significant 24 percent year-on-year growth, with Caratlane's sales expected to soar by 30 percent. The international brokerage has a 'buy' rating on Titan with a target price of Rs 4,574 per share.

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