Following the company’s Q3 business updates, HSBC reiterated its buy call on the stock and raised the target price to Rs 4,200 from Rs 3,900 it gave earlier.
In a note, the brokerage acknowledged strong YoY Q3 jewellery sales at 23%, ahead of consensus expectations. Other divisions did well except the EyeCare division, it said. Strong and consistent results reinforce Titan’s structural attractiveness, HSBC commented.
On Friday after the market closing, Titan reported a broad-based growth in October-December revenue. The company added a total of 90 stores during the quarter, taking the group’s total presence to 2,949 stores. At the end of the September quarter, Titan had 2,859 stores.
Segment-wise, the jewellery division reported a domestic growth of 21% YoY, which was led by double-digit buyer growth and a moderate improvement in average selling prices.
The growth in gold (plain) and coins in this festive quarter notably exceeded the studded sales growth driven by higher consumer interest in gold despite elevated prices and volatility.
Suitable investments in exchange programmes and consumer offers were carried out during the festive period to maintain growth momentum. Wedding segment contribution improved marginally YoY.Also Read: Titan Q3 Update: Company sees 22% revenue growth on strong all-round show
Morgan Stanley has maintained an equal weight stance on Titan with a target price of Rs 3,190 following the Q3 update. Strong jewellery demand trends versus the general sluggishness in discretionary demand augurs well with the company reporting an over 20% growth for the fourth quarter in a row, it said.
In Morgan’s view, the strategy of regular gold exchange programs is working out favourably for Titan.
With returns of over 50% in the past 12 months, the Tata Group stock has outperformed the Nifty which has delivered nearly 20% returns during this period.
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
