Shares of Titan plunged over 3% to ₹2,317 apiece on the BSE in Wednesday’s early deals after the Tata Group company reported a 7% decline in its consolidated net profit in the fourth quarter ended March 2022.
“On medium-to-long term initiatives, Titan seems to be having a lot of good work in the background (not just in jewellery). Titan’s another attempt at foray in international operations can be a big value driver. Our optimism stays intact. This is one company where the capabilities to translate the opportunity to earnings is high, in our view,” said brokerage ICICI Securities.
The brokerage has Add rating on Titan shares with a target price of ₹2,550 apiece. Key downside risks are irrational competitive environment and potential shift to fixed making charges that could limit long-term benefits from operating leverage, as per ICICI Securities.
“Titan has a strong growth runway, given its market share of less than 10% and continued struggles faced by its unorganized and organized peers. Its medium-to-long-term earnings growth visibility is nonpareil. Despite the volatility in gold prices and covid-led disruptions, its earnings CAGR has been stellar (24%) for the past five-years ending FY22. We expect this trend to continue, with over 20% earnings CAGR in the next couple of years,” said Motilal Oswal.
The stock’s near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples, the brokerage house stated which has maintained its Buy rating on the Tata Group stock, with a target price of ₹2,900 per share.
According to BSE shareholding pattern, ace investor Rakesh Jhunjhunwala holds 3.98% stake in Titan whereas his wife Rekha Jhunjhunwala has 1.07% equity in the company as of March 31, 2021.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.