Jhunjhunwala’s Titan stock bet sees EPS upgrades post Q1. What lies ahead?

For

, Titan’s numbers were exceptional, with an estimate-beating margin of 13 per cent in the Jewellery segment being the key highlight.

Even after factoring in a one-off impact of 80–90 basis points, the brokerage said, the number was positive. Besides, the performance of the watches & eye care segment was impressive on both recovery and margin fronts, it said.

“Factoring in the margin outperformance, we are raising FY23E EPS by 4 per cent. We value Titan at 80 times 9MFY24E EPS (76 times FY24E) – a premium to its five-year average of 60 times – and this reflects its growth trajectory and potential scale-up in other verticals, i.e. watches & wearables and Caratlane,” it said while suggesting a target of Rs 3,119.

Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala held a 5.05 per cent stake in the June quarter, which was worth Rs 10,911.30 crore, as per Trendlyne.

Emkay Global said Titan reported an 8 per cent beat to its Ebitda estimates. “Ex-bullion sales, consolidated Ebitda margin at 13.2 per cent was 200 bps higher than pre-Covid levels, led by operating leverage, exit from loss-making ventures and 80 bps one-off,” it said.

Jewellery business, it said, also saw accelerated momentum, with a 3-year CAGR of 23 per cent in the June quarter against 15-20 per cent in H2FY22, led by an 8 per cent CAGR in buyers and rest through the gold price increase. Amid inflation concerns, Titan indicated satisfactory July performance and retained its 5-year outlook of 20 per cent CAGR.

“We raise FY24/25 EPS by 3-4 per cent, led by Q1 beat and upbeat commentary. Titan offers high-teens growth visibility and an improving RoIC profile (45 per cent by FY25E). We maintain Buy with a target of Rs 2,700 from Rs2,530 earlier, valuing Titan at a reduced multiple of 50 times due to a 3-month rollover. Faster traction in Taneira and International operations could offer potential upside,” Emkay said.

Robust performance in challenging times reaffirms the thesis of long-term market share gains for Titan, said ICICIdirect, which said the Titan group company has withstood challenges and emerged as a resilient player. “We believe Titan is a structural growth story and appears to be a key beneficiary of the unorganised to organised shift in the Indian jewellery market,” it said, saying it will come out with a detailed report soon.

First cuts by a few brokerages such as Prabhudas Lilladher and Nirmal Bang Institutional Equities also suggested a beat on numbers.

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