Titan: Is one of the best behind for this Jhunjhunwala inventory?

Whereas most brokerages are bullish on , the biggest holding of the billionaire Jhunjhunwala household, HDFC Securities sees the multibagger inventory dropping as much as 25% to Rs 2,050.

“Whereas Titan’s execution has been on level, it has benefited from a pointy gold value rise over FY19-22. The lion’s share of this value tailwind appears to be over and a lot of the incremental heavy-lifting needs to be volumeled, which may restrain development charges in a slowing financial system,” mentioned

Securities’ analysts Jay Gandhi and Premraj Survase.

Whereas sustaining its promote ranking on Titan, the brokerage has given a DCF-based goal value of Rs 2,050 per share, implying 46x Sep-24 PE.

Titan’s all-time excessive jewellery EBIT margin of 15.3%. Out of that, 200 bps is attributed to excessive diamond price-led positive aspects and customized obligation positive aspects.

Kotak Institutional Equities cited 3 components that makes Titan engaging for the long run – low market share in a big addressable market, extensive hole versus rivals, and regular investments and progress on a number of fronts (buyer base enlargement, regional markets, wedding ceremony section, worldwide and high-value section) that might allow market share positive aspects for the foreseeable future.

The brokerage has elevated its FY2023/24E EPS by 9%/4% and revised the SoTP-based FV to Rs 2,900, implying 57X December 2024E PE.

The inventory, which has rallied round 8% within the final one yr, is buying and selling at a PE a number of of 71.4x (FY23E). “The inventory’s near-term multiples seem costly, however its lengthy runway for worthwhile development warrants premium multiples,” mentioned whereas giving a goal value of Rs 3,210 on the inventory.

“Titan has a robust runway for development, given its market share of sub-10% in jewellery and continued struggles confronted by its unorganized and arranged friends. Its medium-to-long-term earnings development visibility is nonpareil. Regardless of the volatility in gold costs and COVID-led disruptions, earnings CAGR has been stellar at 24% for the previous five-years ending FY22. We anticipate this pattern to proceed, with a 31% earnings CAGR over FY22-24,” it mentioned.

mentioned on an adjusted foundation, the margin efficiency could not look engaging, the identical must be seen within the context of fine shopper recruits, who usually purchase staples jewelry first, and wholesome retailer enlargement.

“We imagine jewelry hallmarking will doubtless create a level-playing subject, driving additional formalisation. Our optimism stays intact. That is one firm the place the capabilities to translate the chance to earnings is excessive, in our view,” mentioned the brokerage which has a goal value of Rs 2,950 on the inventory.

(Disclaimer: Suggestions, recommendations, views and opinions given by the specialists are their very own. These don’t symbolize the views of Financial Instances)