Titan shares fell after its third-quarter business update. Should you buy/accumulate?

Titan’s FY2023 business update notes that the company witnessed standalone revenue growth of 12%, while TEAL grew 58%; Caratlane grew 50.0% YoY, driven by new customer growth in the holiday season, a strong marketing campaign and network expansion. Jewelery sales grew by 11.0% with Tanishq opening its first international store in the US.

Threaded jewelery recorded higher growth than overall divisions led by activations driven by higher contribution from premium prices. In the third quarter, Titan added 111 stores across departments/formats. “We believe continued sales momentum in business divisions will have a positive effect on organized jewellery,” said brokerage Centrum, which remained positive on the upside outlook for Titan shares and maintained Buy with a DCF-based price target. 3,115 per piece.

“In line with our thesis outlined in our report, we expect continued strong revenue growth, as demand is expected to be strong going forward. We believe that the continued sales momentum in the business divisions would have a positive effect on organized jewelery retail, benefiting players like Titan. Additionally, we expect continued strong demand momentum for watches and eyewear given normalized consumer mobility. Further turnaround in Caratlane’s watches and eyewear divisions and continuity in their profitability potential has not yet been priced in,” it added.

Meanwhile, Prabhudas Lilladher analysts believe the double-digit growth in jewelery sales shows an increase in market share despite tepid demand led by aggressive store expansion (22 in Q3), a focus on studded and lighter jewellery, new ranges in the wedding segment and designs and campaigns for the needs of regional tastes and preferences.

“Watches and wearables growth was driven by 3x+ growth in wearables sales, new launches and renovations of 81 WOT stores, which bodes well for the coming quarters. We believe that new companies such as Wearables, Taneira (led by distribution and product range), Carat lane (50% year-on-year sales growth) will continue to grow. We estimate 18% PAT CAGR over FY23-25 ​​and arrive at a DCF-based price target of 2875. We remain positive, however, we expect pullbacks given rich estimates of 49xFY25 EPS. Hold the accumulation,” they said in a note.

Titan shares fell nearly 2% to 2,490 apiece on BSE in early business on Monday.

The above views and recommendations are those of individual analysts or brokerage firms and not of Mint.

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