Titan Company's shares have surged by more than 19% in the past year, outperforming the 10% returns of Nifty50, and are looking set for a potential 17% upside. Analyst Rajesh Palviya suggests that the stock has strong momentum, and there is an expected breakout zone of 2,900 levels based on the formation of a "rounding bottom" pattern. Meanwhile, Sharekhan has retained a 'buy' rating on Titan and believes its revenue growth target of 20% CAGR between FY2022 and FY2027, along with consistent margin improvements, will lead to significant cash flow improvements.
Agencies
Titan Company shares have given over 19% returns in 1 year outperforming the 50-share Nifty50 by 9%. The latter has given 10% returns during the period. The stock is poised for a 17% upside based on the current momentum. A host of triggers are expected to help the stock in its upward move.
Titan shares ended at Rs 2,732 on the NSE on Friday and were up by Rs 61.60 or 2.31% from Thursday’s closing price.
The stock has been relatively volatile and has traded with a 1-year beta of 1.02 according to Trendlyne.
Technical View
Rajesh Palviya: Buy | Rs 3,000 - 3,200 | Upside: up to 17%
Rajesh Palviya, Senior Vice President - Technical and Derivatives Research at Axis Securities, said the stock has gained strong momentum and recovered past losses indicating the fastest recovery. This price action has become a "rounding bottom" formation with an expected breakout zone of 2,900 levels, he said. The past two years' substantial consolidation also resembles an inverse head and shoulder price pattern with neck-line value at around 2,800 levels, he added. Huge rising volumes accompanied the rally, indicating increased participation.
With the current close, the stock is poised for a breakout around 2,800 levels and hence any decisive breakout along with volume confirmation may support the pattern mentioned earlier, and the stock may extend its rally towards the projected upside of 3000-3200 levels in upcoming weeks, he opined.
Currently, the stock is well placed above its 20,50,100, and 200-day SMA, and prices are also inching up along with averages that reconfirm a bullish trend, the Axis Securities analyst said, adding that the weekly and monthly strength indicator RSI is bullish, which supports rising strength on the rally.
Fundamental View Sharekhan on Titan: Buy | Target: Rs 2,950 | Upside: 8%
Sharekhan retains a 'buy' on Titan with a price target of Rs 2,950. The brokerage firm is betting on the company's ambitious target of generating a 20% CAGR in revenue during FY2022-FY2027. This along with consistent margin improvement will help cash flows improve strongly in the coming years, the local brokerage firm said in a report.
"Strong growth outlook, industry tailwinds in the medium term, and strong balance sheet make it a best play in the discretionary space. The stock is currently trading at 60.3x and 49.7x its FY2024E and FY2025E earnings," it said.
Key Risks Sustained inflationary pressures or slowdown in key business verticals would act as a key risk to our earnings estimates, Sharekhan said.
Valuations Titan's Q4FY2023 revenues grew 27% YoY, higher than Sharekhan's estimates of 23-24% growth while EBITDA margins at 10.5% were lower than Street's expectations of 12.1%. The profit after tax (PAT) grew 46% YoY to Rs 3,274 crore.
Agencies
ET CONTRIBUTORS
Get Unlimited Access to The Economic Times
