Titan shares up 27% in six months; brokerage sees stock at Rs 3,300
Titan share price: The Tata group company has recently picked up another 27.18 per cent stake in its subsidiary CaratLane Trading from the jewellery brand's founder and family for Rs 4,621 crore.
- Aug 21, 2023,
- Updated Aug 21, 2023 4:52 PM IST
Shares of Titan Company Ltd have surged 26.96 per cent in the last six months. The stock on Monday settled 0.95 per cent higher at Rs 3,078 against its previous close of Rs 3,049.15. Prabhudas Lilladher (PL) has given an 'Accumulate' rating on the counter with a one-year target price of Rs 3,300. The Tata group company has recently picked up another 27.18 per cent stake in its subsidiary CaratLane Trading from the jewellery brand's founder and family for Rs 4,621 crore.
"We cut our standalone FY24/FY25 EPS estimates by 1.9 per cent/3.5 per cent as Titan will have to partly fund Rs 4,600 crore payout for 27 per cent stake purchase in Caratlane. We believe this acquisition is in the right direction for acquiring full control of largest omnichannel play in light jewellery segment in India with presence across 233 stores. Post this acquisition, Titan will hold 98.28 per cent stake in Caratlane with balance held by employees under the ESOP scheme," PL stated.
"Caratlane reported full turnaround in FY23 with PBT (Profit before tax) of Rs 48.2 crore and has shown a sales growth of 32.8 per cent with 5.5 per cent EBIT margin. Titan will be able to fully leverage growth prospects in light jewellery with omnichannel play in Caratlane," it mentioned.
The brokerage also cited that Titan is investing for future growth and presents a secular play on discretionary consumption with strong presence in jewellery (Tanishq, Mia, Zoya and Caratlane), watches (Titan, Fastrack and Helios), eyewear (Titan Eye+) and also emerging in wearables, dress material (Taneira) and accessories.
"Demand trends in July remain strong across segments, which gives us confidence of pick up in margins over the coming quarters. Titan trades at 60.1x FY25E EPS with 16.4 per cent EPS CAGR over FY23-25. We have assigned SOTP target of Rs 128/share for Caratlane (Rs 76 earlier) and assign a DCF based target price of Rs 3,300 (Rs 3,172 for standalone business and Rs 128 for Caratlane) (Rs 3,240 earlier – Rs 3,164 for standalone and Rs 76 for Caratlane). Retain 'Accumulate'," PL further stated.
Separately, Nuvama Institutional Equities has maintained its 'Buy' rating. The brokerage has a target price of Rs 3,425 on the counter.
The stock today traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 62.95. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 81.55 against a price-to-book (P/B) value of 22.57.
The scrip has an average target price of Rs 3,184, Trendlyne data showed, suggesting a potential upside of just 2 per cent. It has a one-year beta of 0.70, indicating low volatility on the counter.
Meanwhile, Indian equity benchmarks settled on a positive note today, led by gains in technology, financial, metal, pharma and consumer stocks. The 30-share BSE Sensex pack rose 267 points or 0.41 per cent to finish at 65,216, while the broader NSE Nifty index moved 83 points or 0.43 per cent up to close at 19,394.
Also read: Titan shares: Caratlane stake purchase EPS dilutive in near term. Stock price targets & more
Shares of Titan Company Ltd have surged 26.96 per cent in the last six months. The stock on Monday settled 0.95 per cent higher at Rs 3,078 against its previous close of Rs 3,049.15. Prabhudas Lilladher (PL) has given an 'Accumulate' rating on the counter with a one-year target price of Rs 3,300. The Tata group company has recently picked up another 27.18 per cent stake in its subsidiary CaratLane Trading from the jewellery brand's founder and family for Rs 4,621 crore.
"We cut our standalone FY24/FY25 EPS estimates by 1.9 per cent/3.5 per cent as Titan will have to partly fund Rs 4,600 crore payout for 27 per cent stake purchase in Caratlane. We believe this acquisition is in the right direction for acquiring full control of largest omnichannel play in light jewellery segment in India with presence across 233 stores. Post this acquisition, Titan will hold 98.28 per cent stake in Caratlane with balance held by employees under the ESOP scheme," PL stated.
"Caratlane reported full turnaround in FY23 with PBT (Profit before tax) of Rs 48.2 crore and has shown a sales growth of 32.8 per cent with 5.5 per cent EBIT margin. Titan will be able to fully leverage growth prospects in light jewellery with omnichannel play in Caratlane," it mentioned.
The brokerage also cited that Titan is investing for future growth and presents a secular play on discretionary consumption with strong presence in jewellery (Tanishq, Mia, Zoya and Caratlane), watches (Titan, Fastrack and Helios), eyewear (Titan Eye+) and also emerging in wearables, dress material (Taneira) and accessories.
"Demand trends in July remain strong across segments, which gives us confidence of pick up in margins over the coming quarters. Titan trades at 60.1x FY25E EPS with 16.4 per cent EPS CAGR over FY23-25. We have assigned SOTP target of Rs 128/share for Caratlane (Rs 76 earlier) and assign a DCF based target price of Rs 3,300 (Rs 3,172 for standalone business and Rs 128 for Caratlane) (Rs 3,240 earlier – Rs 3,164 for standalone and Rs 76 for Caratlane). Retain 'Accumulate'," PL further stated.
Separately, Nuvama Institutional Equities has maintained its 'Buy' rating. The brokerage has a target price of Rs 3,425 on the counter.
The stock today traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 62.95. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 81.55 against a price-to-book (P/B) value of 22.57.
The scrip has an average target price of Rs 3,184, Trendlyne data showed, suggesting a potential upside of just 2 per cent. It has a one-year beta of 0.70, indicating low volatility on the counter.
Meanwhile, Indian equity benchmarks settled on a positive note today, led by gains in technology, financial, metal, pharma and consumer stocks. The 30-share BSE Sensex pack rose 267 points or 0.41 per cent to finish at 65,216, while the broader NSE Nifty index moved 83 points or 0.43 per cent up to close at 19,394.
Also read: Titan shares: Caratlane stake purchase EPS dilutive in near term. Stock price targets & more