Gold price

Sell Titan Company, target price Rs 1750: HDFC Securities

Oct 1, 2022

Synopsis

Titan Company Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 179004.32 Crore) operating in Gems and Jewellery sector.

ET CONTRIBUTORS Promoters held 52.9 per cent stake in the company as of 31-Mar-2022, while FIIs owned 18.4 per cent, DIIs 10.21 per cent.
Smart Talk

Securities has sell call on

with a target price of Rs 1750. The current market price of

. is Rs 2020.65. Time period given by analyst is one year when Titan Company Ltd. price can reach defined target.

Titan Company Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 179004.32 Crore) operating in Gems and Jewellery sector.

Titan Company Ltd. key Products/Revenue Segments include Jewellery, Watches, Gold, Eyewear, Traded Goods, Precious Semi Precious Stones, Other Operating Revenue, Other Services for the year ending 31-Mar-2021.

Financials For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 7872.00 Crore, down -22.01 % from last quarter Total Income of Rs 10094.00 Crore and up 4.25 % from last year same quarter Total Income of Rs 7551.00 Crore. Company reported net profit after tax of Rs 527.00 Crore in latest quarter.

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Investment Rationale Titan’s Q4FY22 revenue grew 4% YoY to INR78bn. Jewelry (ex-bullion) declined 3% YoY (three-year CAGR for Q4FY22: ~17%; in-line) due to (1) Omicron-led demand disruption and (2) gold price volatility. What was more underwhelming was the underlying jewelry profitability at ~10% (down 90bps YoY; HSIE: 12%). We suspect Titan’s customer acquisition cost could rise as gold exchange rises in sourcing mix during periods of uncertain demand/high inflation - a deterrent to its punchy valuation. FY23/24 EPS estimates are cut by 3% each to account for cost normalisation. It maintains SELL recommendation with an unchanged DCF-based TP of INR1,750/sh, implying 48x FY24 P/E.

Promoter/FII Holdings Promoters held 52.9 per cent stake in the company as of 31-Mar-2022, while FIIs owned 18.4 per cent, DIIs 10.21 per cent.

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