Titan zooms 6%, nears record high; can hit Rs 2,800, tech charts suggest

Shares of Titan Company rallied 6 per cent to Rs 2,744.30 on the BSE in Friday’s intra-day trade after the Tata Group firm said its witnessed healthy double-digit growth across most businesses with overall sales growing 18 per cent year-on-year (YoY) in September quarter (Q2FY23). The stock was trading close to its record high level of Rs 2,767.65, which it touched on March 21, 2022.

The company said the outlook for festive season (from Navratri in end Sep’22) continues to be optimistic and is visible in positive consumer sentiment across categories. Retail network continued the pace of expansion adding 105 stores (net) for the quarter, Titan said.

The company’s jewellery division grew 18 per cent YoY on a high base of Q2FY22 that had elements of pent-up demand and spillover purchases of a Covid disrupted Q 1 FY22. Gold jewellery (plain) clocked low double digit growth whereas studded sales were higher than the overall division driven by good activations and better contribution from high value purchases.

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Watches division also continued its healthy trajectory with topline growth of 20 per cent (three-year CAGR: 5%). CaratLane (72 per cent owned subsidiary), continues to scale up rapidly with sales growth of 56 per cent YoY.

Titan has clocked robust growth in H1FY23. As per ICICI Securities estimates, the brokerage firm said it expect Titan to exit with more than 30 per cent YoY revenue growth in FY23E (driven by jewellery segment).

Over a long term, the company aspires to grow jewellery revenues by 2.5x by FY27 (implied CAGR: 20 per cent from FY22 base). Titan’s new growth engine CaratLane has already clocked around Rs 1,000 crore sales in H1FY23 (FY22: Rs 1250 crore) and is on track to achieve Rs 2000+ crore sales in FY23. We expect gross margins to improve in Q2FY23 as studded sales were higher than the overall division driven by good activations and better contribution from high value purchases, ICICI Securities said in a note.

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According to Motilal Oswal Financial Services, the earnings growth visibility for Titan remains strong. It has compounded earnings by around 20 per cent for an elongated period of time. In the Jewelry industry, which is organizing at a rapid space, it is clearly at the vanguard in terms of growth among organized players. Its runway for growth is long, with a market share of around 6 per cent. Unlike other high-growth categories, the competitive intensity from organized and unorganized peers in Jewelry is considerably weaker. The structural investment case for Titan is intact, the brokerage firm said.

Technical View

Bias: Positive

Support: Rs 2,638