Titan: Is the best behind for this Jhunjhunwala stock?
“Even though Titan’s execution has been on stage, it has benefited from a sharp gold price rise over FY19-22. The lion’s share of this price tailwind appears to be to be in excess of and most of the incremental significant-lifting has to be volumeled, which could restrain progress rates in a slowing financial system,” said
Securities’ analysts Jay Gandhi and Premraj Survase.
Even though maintaining its provide score on Titan, the brokerage has offered a DCF-dependent goal selling price of Rs 2,050 for each share, implying 46x Sep-24 PE.
Titan’s all-time substantial jewelry EBIT margin of 15.3%. Out of that, 200 bps is attributed to superior diamond cost-led gains and customized obligation gains.
Kotak Institutional Equities cited 3 factors that will make Titan attractive for the extended time period – minimal sector share in a significant addressable industry, large gap compared to competition, and steady investments and development on many fronts (buyer base growth, regional markets, marriage segment, intercontinental and substantial-worth segment) that would empower industry share gains for the foreseeable future.
The brokerage has greater its FY2023/24E EPS by 9%/4% and revised the SoTP-primarily based FV to Rs 2,900, implying 57X December 2024E PE.
The inventory, which has rallied all around 8% in the last 1 12 months, is trading at a PE a number of of 71.4x (FY23E). “The stock’s near-term multiples look costly, but its lengthy runway for profitable advancement warrants quality multiples,” claimed whilst giving a concentrate on value of Rs 3,210 on the stock.
“Titan has a potent runway for growth, provided its market place share of sub-10% in jewellery and ongoing struggles confronted by its unorganized and organized friends. Its medium-to-long-time period earnings advancement visibility is nonpareil. In spite of the volatility in gold prices and COVID-led disruptions, earnings CAGR has been stellar at 24% for the past 5-decades ending FY22. We assume this trend to continue, with a 31% earnings CAGR about FY22-24,” it stated.
explained on an modified foundation, the margin general performance could not look interesting, the same desires to be found in the context of great consumer recruits, who ordinarily get staples jewelry initially, and healthier keep enlargement.
“We consider jewelry hallmarking will very likely make a amount-participating in discipline, driving additional formalisation. Our optimism stays intact. This is a single company the place the capabilities to translate the chance to earnings is significant, in our see,” said the brokerage which has a concentrate on price tag of Rs 2,950 on the stock.
(Disclaimer: Suggestions, suggestions, sights and viewpoints given by the industry experts are their very own. These do not characterize the sights of Financial Periods)