Should you buy, sell or hold Titan shares after better-than-estimated Q4 results?

After consumer discretionary major Titan Company posted better-than-estimated Q4FY23 earnings on Wednesday, top brokerages remain mixed on the stock outlook.

While Jefferies cut its price target and maintained Hold, PhillipCapital retained a ‘Cautiously Optimistic’ rating on the jewellery maker. Prabhudas has a ‘Buy’ call on the counter. Meanwhile, Motilal Oswal is the most bullish and estimates a 16% upside.

Titan’s standalone net profit came in at Rs 734 crore for the quarter ended March 31, 2023, up 50% over Rs 491 crore reported in the same period last year. Revenue from operations surged 33% on-year to Rs 9,704 crore for the quarter under review. The same stood at Rs 7,276 crore in the year ago period. The company's EBIT (earnings before interest and taxes) rose 37% to 1,053 crore, while EBIT margins stood at 12%.

Titan shares were trading marginally higher at Rs 2685 in Thursday's trade on BSE.

Here's what the brokerages said about Titan following Q4 show:

Jefferies: Hold | Target: 2,550 | Downside: 4%
Jefferies has tweaked its FY2023-25 earnings by 1-2%. It retains 'Hold' with a revised price target of Rs 2,550 from an earlier target of Rs 2,700.

Motilal Oswal: Buy | Target: 3,080 | Upside: 16%
Motilal Oswal maintained a Buy rating on Titan with a price target of Rs 3,080. Titan boasts of an outstanding track record that surpasses its peers, with superior short-term growth prospects, and exceptional long-term growth potential, all of which justify its high valuations, it said. The target price is premised on 55xFY25E EPS.

Phillip Capital on Titan: Cautiously Optimistic | Target: Rs 3,000 | Upside: 13%
Brokerage PhillipCapital maintained a 'Buy' on Titan, noting that long-term drivers remain intact.

Increasing consumer shift to organised jewellery, as unorganised jewellers find it difficult to operate due to increasing cost of compliance augurs well for Titan, it said. Aggression in the highly lucrative wedding jewellery market and increasing traction on the revised gold exchange programme for Titan’s Golden Harvest Scheme are other positives for the jewellery maker.

However, key risks like introduction of regulatory measures to curb gold imports could be a near-term challenge to earnings. Slowdown in discretionary demand owing to higher gold price and exhaustion of Covid-led savings are some other risks.

"We have cut our FY24-25 EPS estimates by 6-10% to account for increased competitive intensity on the gold rate front; diamond inventory gains no longer being available over FY2024-25 and higher volatility in the gold price which will eventually lead to deferment of demand," Phillip Capital said.

Prabhudas Lilladher: Buy | Target: Rs 2,956 | Upside: 11%
Amnish Aggarwal, Head of Research, Prabhudas Lilladher maintained a Buy on Titan for a price target of Rs 2,956. He highlighted strong revenue print amid disappointment in margins. The analyst said that strong momentum continues across all key business segments aided by strong network expansion and strong consumer confidence. The stock trades at 49.6X FY25 EPS.

Emkay: Hold | Target: Rs 2,620 | Downside: -1%
Emkay prefers to remain conservative on the stock on weak macros. Q1 EBITDA was 3% below its estimates due to weaker margin in watches /eyewear, while the jewellery margin was better.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)