Titan remains preferred discretionary ‘buy’ after a glittering Q4 update

Titan’s jewellery business grew 23 percent on-year, with 31 new stores being added during the quarter

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Despite challenging macroeconomic conditions, Titan has managed to report a 25 percent year-on-year increase in its top line for the March quarter. The company has attributed this growth to higher contributions from watches & wearables and its emerging businesses. This makes Titan the only ‘buy’ in the Indian consumer discretionary sector, according to Goldman Sachs.

In fact, the ’emerging businesses’ category saw the maximum growth with sales shooting up by 84 percent YoY. This category includes fragrance and fashion accessories, and Indian dress wear sold under the ‘Taneira’ brand, which grew by 208 percent YoY.

Also Read: Market LIVE Updates: SGX indicates a flat start for the Indian indices; US, Asian markets gain

The watches & wearables segment also did well, registering a 41 percent growth YoY. This growth was driven by strong growth in analog watches segment and almost tripling of revenues from wearables.

Jewellery segment

Meanwhile, the company’s jewellery business grew 23 percent on-year, with 31 new stores being added during the quarter. This came on a low base as Q4 FY22 was disrupted due to partial lockdowns caused by Omicron wave.

If we look at the jewellery segment’s trajectory over the last few quarters, it grew 11 percent on-year in Q3 FY23 and 18 percent in Q2 FY23. Compared to that Q4’s growth has been higher. The major reason behind this has also been rising gold prices, which in turn means higher making charges for jewellery.

Also Read: MC Long View: Can Vedant Fashions truly be the next Titan?

The company said in its update that large ticket purchases were led by a rich mix of high value studded, solitaires and a revival in wedding sales. The purchases at entry level and lower price bands also saw normalization in buyer growth.

Analyst recommendations

The stock has been sideways for some time now, declining closed to 5 percent in the last six months. But the number of analyst “buy” calls for the stock keeps increasing. According to JPMorgan, Titan is a preferred discretionary play. The firm believes that Titan is well-positioned to achieve its targeted 20 percent jewellery revenue compound annual growth rate over FY22-27.

Citi has also given a ‘buy’ rating to Titan, with a target at Rs 3,091 per share, citing the company’s impressive growth despite a relatively weak March.

Macquarie has an ‘outperform’ call, with a target at Rs 3,250 per share. “Demand at lower price points seems to be recovering. Additionally, the demand softening in March due to a sharp rise in gold prices is expected to reverse,” it said.

At 10:30 am, the stock was quoting at Rs 2,566 on the NSE, higher by 0.7 percent. It touched a high of Rs 2,602, soon after market open.

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