Fundamental Radar: Underperformer of 2022, Titan could rally over 20% in 2023; time to buy?

Titan Company, part of the S&P BSE Sensex index, is up a little over 3% compared to around 8% rise seen in the benchmark index so far in the year 2022, but the opening of the economy, wedding season, additional stores is likely to support the momentum.

The gems and jewelry stock which remains subdued could well hit Rs 3,210 in the next 12 months which translates into an upside of over 22% from Rs 2,615 recorded on 5 December, suggest experts.

Long-term growth story remains intact for Titan Company which is the largest organised player in the organised jewelry market, but still has a market share of less than 10%.

“With customers gradually shifting to organised players and given continued struggles faced by its unorganised and organised peers, Titan has a strong runway for growth,” Sneha Poddar, Associate Vice President at Motilal Oswal Financial Services Limited, said.

As per the Confederation of All India Traders (CAIT), about 32 lakh weddings are scheduled to take place between 4 November to 14 December which is likely to generate business of at least Rs 3.75 lakh crore. This will benefit Titan in a big way.

“In fact, Q3 has started on a very strong footing for the company and the management expects 2HFY23 to be buoyant, aspiring 30% growth for FY23,” highlights Poddar.

Titan is targeting 2.5x of FY22 sales by FY27, i.e. ~20% CAGR. It aims to open more than 600 Tanishq stores over the next three years (389 stores in March 2022).

“Its medium-to-long-term earnings growth visibility is best among largecap consumer and retail companies. Despite the volatility in gold prices and COVID-led disruptions, earnings grew at a stellar pace of 24% CAGR over the last five-years,” she added.

“We expect this trend to continue, with a 31% earnings CAGR over FY22-24. A long runway for profitable growth warrants premium multiple for Titan. We remain positive, with a TP of Rs 3,210 per share,” recommends Poddar.

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