Titan a lifestyle play; stock may stay rangebound, premium valuations to sustain, say analysts

Titan Company's March quarter results were healthy, given strong underlying demand trends in jewellery and scalability in wearables, eyewear and Taneira. Analysts believe the premium valuations of the stock are sustainable, but feels the suspect a range-bound momentum in the near future. Besides, analysts said the profit growth from here on would be volume-led that could be a tall task, given the slowing economy. Their price target on the counter stayed in the Rs 2,400-3,100 range.

The scrip stood at Rs 2,672.40 on BSE in Thurday's trade, up 1 per cent.

Richard Liu of JM Financial said Titan’s continued confidence on its businesses’ growth path is likely to assuage concerns on urban discretionary consumption slowdown for the time being.

The Titan management noted the growth picked up after a soft start to April and JM Financial believes that the target to grow the jewellery segment revenue by 2.5 times over FY22-27E appears on-track.

"To be fair, gold-price volatility does have its impact on buying behaviour but consumer-spending continues to be reasonably strong when there are occasions to do so, and a promising wedding calendar for May-June is likely a good indicator for the months ahead. We continue to like Titan but expect the stock-price to be somewhat range-bound in the immediate term," Liu said in a note.

HDFC Institutional Equities said Titan’s execution has been on point and it has benefited from a sharp gold price rise and the channelling of elevated household savings over FY19-23.

"This benefit is unlikely to repeat and most of the heavy lifting from here on has to be volume-led, which could restrain supernormal growth rates in a slowing economy. We maintain our FY24/25 EPS estimates and our REDUCE rating with a DCF-based TP of Rs 2,400 (implying 47x Jun-25 P/E)," it said.

Motilal Oswal Securities said 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. This brokerage has reiterated its 'BUY' rating on the stock with a target price of Rs 3,080 that is premised on 55 times FY25 estimated EPS.

Titan is gradually emerging as a lifestyle play which will help sustain premium valuations, Prabhudas Lilladher said while suggesting a target of Rs 2,992 on the stock. This brokerage, along with a hanful other broking firms, have retained 'Buy' rating on the stock with price targets as high as

Kotak Institutional Equities said the reduction of franchisee commissions is a tailwind for Titan Company. It has raised its FY2023-25E EPS by 2-6 per cent and has suggested a revised fair value of Rs 2,970 for the stock from Rs 2,700.