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Buy Titan Company; target of Rs 2830: Motilal Oswal

Motilal Oswal is bullish on Titan Company recommended buy rating on the stock with a target price of Rs 2830 in its research report dated October 27, 2021.

October 28, 2021 / 12:23 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Motilal Oswal's research report on Titan Company


Titan Company’s (TTAN) sales for 2QFY22 were in-line (up 64.6%) at INR74.9b, although the operating margin at 12.9% for the quarter (est. 10.7%) came as a positive surprise and stood at its second-highest level since 2QFY06. This led to EBITDA and PAT surpassing our estimates by more than 20%. What was even more remarkable was that this margin improvement was achieved in a quarter that still did not see the contribution from Studded jewellery returning to normal levels and witnessed low margin bullion sales as well. Nevertheless, the sharp increase in sales is likely to have helped TTAN on the operating leverage front. Management has stated that it aims to keep jewellery margins in the 12-13% range. Jewellery outlook remains good as well, given the healthy festive season commentary. Management has also indicated significant expansion plans in the company’s smaller businesses like Eyewear and Taneira. Maintain Buy.


Outlook


At its current valuation of 79.3x FY23E EPS, the stock’s near-term multiples appear expensive, although its long runway for profitable growth warrants premium multiples. TTAN remains our top pick in the discretionary consumption space. We maintain our Buy rating with a TP of INR2,830 per share (70x FY24 EPS).


For all recommendations report, click here

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first published: Oct 28, 2021 12:23 pm
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