Titan Shares Crack 3% Despite Double Digit Growth in Q3; Should you Buy, Sell or Hold?
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Titan shares in early trade today fell 3 per cent
Titan Share Price: Tata Group’s fashion and jewellery retail arm Titan Company Ltd. reported a 12 per cent growth in combined sales year-on-year
Titan Share Price: Tata Group’s fashion and jewellery retail arm Titan Company Ltd. reported a 12 per cent growth in combined sales year-on-year across standalone businesses, amid healthy consumer demand during festive season, while TEAL grew 58 per cent; Caratlane grew at 50.0 per cent YoY.
At the end of the December quarter, the retail presence of the company stands at 2,362 stores.
Titan’s jewellery division saw a growth of 11 per cent year-on-year. The growth was led by healthy new buyers in the festive period, higher value purchases in the studded category and unique new collections for the season. The sales from studded category moderately outpaced the gold jewellery (plain) segment compared to the same period last year.
Wedding sales also increased during the quarter. Titan’s jewellery retail brand Tanishq opened its first international boutique store in USA in December 2022. The company now has a total of six stores spread across Dubai, Abu Dhabi and USA in the overseas market. The new store expansion (net) for the quarter consisted of eight stores in Tanishq and 14 in Mia by Tanishq.
The watches and wearable division of the company posted a 14 per cent year-on-year growth led by strong traction in the wearables space. Various product launches in the fiscal year and the festive season contributed to the growth. Store expansions pan-India included 24 new store of Titan World, 17 of Helios and seven of Fastrack.
Titan EyeCare expanded its presence with 36 new stores in Titan Eye+ during the quarter.
Fragrances & Fashion Accessories division grew nearly 39 per cent year-on-year driven by nearly 50 per cent growth in fragrances and nearly 21 per cent growth in fashion accessories. Division launched the ‘IRTH’ brand of women handbags during the quarter.
The Indian dress wear brand Taneira’s sales grew by nearly 150 percent year-on-year driven by new store openings and double digit growth from existing stores. The brand opened five new stores during the quarter, taking the total store count to 36.
Two wholly-owned subsidiaries of the company – Titan Engineering & Automation Ltd and CaratLane – reported a 58 per cent and 50 per cent year-on-year growth, respectively.
What Should Investors Do Now?
Brokerage firm Morgan Stanley says that initial trends were slightly weaker than expected. It added that growth in the second half of the quarter was slower than the first half.
A weaker-than-expected pace of store additions is the key takeaway from Titan’s business update, according to Macquarie. However, it also added that the update reaffirms the resillience of Titan’s consumer demand.
“We believe the continued sales momentum across business divisions would have positive impact on the organized Jewelry," said brokerage Centrum which has remained positive on growth prospects for Titan shares and retains Buy with DCF-based target price Rs 3,115 apiece.
“In line with our thesis as argued in our report, we expect continued strong uptick in revenue, as the demand is expected to be robust in going forward. We believe the continued sales momentum across business divisions would have positive impact on the organized Jewelry retail benefiting players like Titan. In addition, we expect strong demand momentum for Watches and Eyewear to continue given normalized consumer mobility. The further turnaround in the Caratlane, watches, and eyewear divisions and continuity in their profitability potential not yet priced in," it added.
Meanwhile, analysts at Prabhudas Lilladher believe double-digit Jewelry sales growth shows market share gains despite tepid demand led by aggressive store expansion (22 in 3Q), focus on studded and lighter jewelry, new ranges in wedding segment and designs & campaigns to cater to regional tastes and preferences.
“Watches and wearables growth has been led by 3x+ growth in wearable sales, new launches and renovation of 81 WOT stores, which augurs well for coming quarters. We believe new businesses like Wearables, Taneira (Distribution and product range led), Carat lane (50 per cent sales growth YoY) will continue to gain traction. We estimate 18 per cent PAT CAGR over FY23-25 and arrive at a DCF based target price of Rs 2875. We remain positive, however, expect back ended returns given rich valuations of 49xFY25 EPS. Retain Accumulate," they said in a note.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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