Titan Q2 earnings garner positive views from brokerages; CLSA, HSBC recommend buy

Bolstered by better-than-estimated September quarter earnings last week, shares of Titan Company found a favourable review from a clutch of top brokerages. While CLSA upgraded the stock to buy and revised its price targets upwards on the company’s knack for finding buyers with spending ability, HSBC reinforced its stance on strong Q2 earnings.

Among domestic brokerages, Nuvama and Motilal Oswal dubbed Titan among their top consumer discretionary plays.

Titan Company on Friday reported a nearly 10% year-on-year (YoY) rise in net profit for the quarter ended September 2023 to Rs 940 crore. This was way higher than an ETNow poll of Rs 860 crore. Revenue from operations grew by 34% YoY to Rs 11,660 crore and was also above the estimated Rs 10,375 crore.

Titan shares traded in a narrow range on Monday, gyrating between red and green.

Here is what brokerages recommended on Titan:

CLSA: Buy | Target: 3,948
CLSA has upgraded the Titan Company stock to ‘Buy’ from ‘Outperform’ and it raised the target price to Rs 3,948 from Rs 3,540. The brokerage said that the company is reaching out to all the consumers who have the ability to spend. On its Q2 earnings, the brokerage said that margins were lower YoY but better than expected. On its future prospects, the company is expected to accelerate expansion into two new large markets, luxury and overseas which should increase Titan’s addressable market, significantly in CLSA’s view.

HSBC: Buy | Target: Rs 3,900
HSBC has maintained a buy rating for a price target of Rs 3,900, opining that its strong Q2 earnings reinforce Titan’s structural appeal. It also finds Q2 jewellery sales and EBIT margin impressive as it beat its expectations by a wide margin. Other divisions delivered double-digit growth, too. The scaling up of the international jewellery division is on track.

Motilal Oswal: Buy | Target: Rs 3,900
Motilal reiterated a Buy rating with a target price of Rs 3,900 which is premised on 65xFY25E EPS. Titan remains among its top consumer discretionary ideas in India.

Titan Company’s strong sales growth beat Motilal’s estimates and the brokerage said that Titan is one of the few consumer companies in the current context that has been growing revenue at this pace for the last 5-6 quarters, despite the high base and discretionary nature of its product segments.

Management remains optimistic on the festive and wedding seasons despite the upswing in gold prices. Titan’s other businesses such as watches, wearables, and eyecare are also consistently delivering healthy performance.

Nuvama: Buy | Target: Rs 3,795
Nuvama factors in the NCD-raise, values Caratlane separately and increased the target valuation to 65X (from 60x) building in the international opportunity, which would not reflect in near-term earnings. Nuvama has maintained a Buy call on the counter.

Nuvama calls Titan’s Q2FY24 showing strong with EBITDA outperformance of 9%/15 to our/consensus estimate.

(You can now subscribe to our ETMarkets WhatsApp channel)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)