Titan bags ‘buy’ call from Motilal Oswal on strong growth outlook, analysts see 14% upside

The stock of this watch-to-jewellery maker surged over 4 percent, as against 0.7 percent rise in the benchmark Nifty index

The share price of Titan witnessed a slight increase to Rs 3,760 per share when Motilal Oswal analysts rated it as a 'buy'. The analysts predicted a vigorous growth outlook for the company and set a target price of Rs 4,300, which implies a 14% increase from the current level.

However, later on, the stock lost its gains and fell by almost 0.2% as of 09:35 am. On January 30, 2024, Titan's shares reached a 52-week high of Rs 3,885 per share.

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Analysts at Motilal Oswal said since Titan has the best-in-class track record, its eagerness to expand its user base makes it bullish on the stock. They believe that their consumer preference for branded jewellers will keep robust growth intact for the category.

"Titan jewellery and other businesses still have strong long-term growth potential. With a jewellery market share of 8 percent, there is significant headroom for Titan's growth. The gradual recovery in studded ratio should support margin improvement," the brokerage firm said.

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Titan's management is confident that the jewellery EBIT margin of 12-13 percent can be sustained despite rising competition. In the long run, the company expects to maintain healthy growth, driven by a rising urban population, an expanding consumer base, and changing consumer preferences from unorganized to organized. Analysts at Motilal Oswal anticipate that Titan will deliver a compounded annual growth rate (CAGR) of 17 percent in revenue, 23 percent in EBITDA, and 26 percent in PAT during FY24-26. They added that while Titan's valuation may be steep, its superior competitive positioning and business moats are not easily replicable.

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