Titan shares poised for another 13% upside on promising growth outlook, says analyst

While the recent run-up in gold prices has led to near-term postponement of demand, Titan has historically performed well when gold prices surged.

During 2008-13, when gold prices went up by a 24.8 percent CAGR (compound annual growth rate), Titan's jewellery EBIT and overall PAT clocked a CAGR of 49.7 percent and 35.6 percent, respectively. During the same period, its share price saw a 32 percent CAGR. Since its making charges are based on the percentage of the value of gold, the margin will improve after a lag, Motilal said.

Titan's medium- to long-term earnings growth opportunity is best-of-breed, reflected in five-year sales, EBITDA and PAT CAGRs of 20.3 percent, 24.3 percent, and 23.9 percent, respectively.

Titan shares were trading nearly a percent higher at Rs 3,185.95 apiece on the NSE on Friday, September 8.

The stock, in which investor Rekha Rakesh Jhunjhunwala has a stake, rallied 33 percent in the past six months. On a year-to-date basis, Titan shares have gained 24.16 percent and are up 21.33 percent in the last one-year period.

Rekha Rakesh Jhunjhunwala holds a 5.36 percent stake, representing 47,595,970 equity shares in the Tata Group company.

Technically, the 14-day relative strength index (RSI) of the counter stood at 70.7, indicating it's trading in the overbought zone. This implies that the stock may show a pullback. Titan shares have a one-year beta of 0.7, suggesting very low volatility during the same period.

The counter is trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.