Shares of Titan Company declined in the early trade on May 4 after the company declared its March quarter (Q4FY22) earnings.
Titan Company on May 3 reported a 7.2 percent decline in its year-on-year (YoY) net profit at Rs 491 crore for the quarter ended March 2022, sharply below analysts' estimate of Rs 618 crore.
The company's revenues grew marginally by 2 percent to Rs 7,276 crore YoY during the period under review, exceeding the street's expectation of Rs 6,935 crore. Further, the company's board recommended a dividend of Rs 7.5 per share for the financial year ended March 31, 2022.
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Here is what brokerages have to say about the stock and the company's post-March quarter earnings:
We cut FY23 and 24 EPS estimates by 5.9% and 4% and reiterate BUY with a DCF-based target price of Rs 2,701 (earlier Rs 2,754).
The company reported a relatively weaker set of numbers on the back of 1) volatility in gold prices (the wedding category saw a degrowth of 9% YoY) and 2) store lockdowns in January due to the Omicron scare. 3) weak growth across categories as Rs 1.3bn inventory gains in diamond were more than offset by Rs 510 million of VRS and Rs 720 million of ex gratia to employees.
We estimate a 25.3% PAT CAGR over FY22-24 and remain positive given the structural story on account of market share gains, a strong balance sheet, a franchisee-based model, and a strong brand. However, valuations at 64.3x FY24 leave little room for re-rating.
There is no material change to our FY23/FY24 EPS forecast.
TTAN has a strong growth runway, given its market share of less than 10% and the continued struggles faced by its unorganized and organized peers. Its medium-to-long-term earnings growth visibility is nonpareil.
Despite the volatility in gold prices and COVID-led disruptions, its earnings CAGR has been stellar (24% for the past five years ending FY22. We expect this trend to continue, with over 20% earnings CAGR in the next couple of years.
The stock’s near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples. We maintain our Buy rating with a target price of Rs 2,900 per share (75x FY24E EPS).
Titan’s Q4FY2022 results were affected by multiple factors. The company has geared up for expected high sales during the auspicious days and postponement of the wedding season, which will help in posting a good performance for the jewellery business in Q1FY2023 and the quarters ahead.
While the jewellery business is expected to post consistent double-digit growth, other businesses (including watches and eye care) are expected to scale-up fast with revamped strategies.
Titan is well poised to achieve strong revenue and PAT CAGR of 19% and 28%, respectively, over FY2022-FY2024.
From a long-term perspective, any correction from the current levels can be considered a good opportunity to enter the stock. We maintain our Buy recommendation on the stock with an unchanged price target (PT) of Rs 2,900.
The bourse has kept an overweight rating on Titan Company with a target price of Rs 2,720 per share as Q4 earnings missed estimates.
The demand environment in Q4 was challenging, while management was optimistic on the outlook for FY23 with good trends in April, reported CNBC-TV18.
The research firm has maintained a hold rating on the stock with a target price of Rs 2,600 per share.
It was lower-than-expected Q4 results, mainly due to a miss on reported jewellery margin.
Company management reiterated jewellery margin guidance of 12-13%, reported CNBC-TV18.
At 09:25 hrs Titan Company was quoting at Rs 2,346.55, down Rs 40.05, or 1.68 percent on the BSE.