Shares of Titan Company Ltd. will be in focus in Thursday's trade as analysts at Motilal Oswal Financial Services retained its 'Buy' rating on ace investor Rekha Jhunjhunwala's biggest stock bet, citing a robust growth outlook for the Tata Group company.
Titan shares are projected to hit the ₹4,300 mark, implying a potential upside of 14% from the current market levels, according to the domestic brokerage house.
Source: Motilal OswalAfter an interaction with the senior management team of Titan, Motilal said the company is expected to sustain healthy growth in the long term, driven by increasing urban population, rising consumer base, multiple jewellery brands for different income groups, fast-changing consumer preferences, scope of market share gain, and rising women/young workforce.
While demand has remained steady for Titan in January and February 2024, gold inflation in March has led to a delay in demand, which is a typical trend in gold inflation months. "Titan has reduced the gold premium compared to peers in a calibrated manner, which has been compensated with other initiatives to protect operating margin," the brokerage said.
Motilal also said that Titan's jewellery and other businesses still have strong long-term growth potential. "With a jewellery market share of 8% in a sizable ₹5 trillion market, there is significant headroom for growth for Titan. The gradual recovery in the studded ratio should support margin improvement," it said.
Though the analysts remain cautious about the near-term consumption trend, they continue to prefer Titan for its best-in-class execution track record and its eagerness to expand the user base. Consumer preference for branded jewellers will keep the robust growth rate intact for the category, Motilal said.
"We model a CAGR of 17% in revenue, 23% in EBITDA, and 26% in PAT during FY24-26. Titan's valuation is rich but its superior competitive positioning (sourcing, studded ratio, consumer trust, youth-centric, reinvestment) and business moats are not easily replicable," it added.
As of December 2023, Rekha Jhunjhunwala owns a 5.37% stake in Titan, which is worth ₹17,930 crore as of Wednesday's closing price. With this, Titan was Jhunjhunwala's biggest portfolio stock in terms of value.
(Edited by : Amrita)
First Published: Mar 28, 2024 10:40 AM IST
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