An eye for eyewear: Titan up on ADIA's Lenskart bet

Mumbai: Shares of Titan Company gained as much as 3.5% on Thursday after Abu Dhabi Investment Authority (ADIA) invested $500 million in Lenskart valuing it at $4.5 billion. Titan also owns an eyewear division, Eyeplus. Analysts said there are hopes that the Lenskart investment would prompt investors to assign better valuations to Titan's eyewear subsidiary. The stock ended 2.1% higher at ₹2,450.35 on Thursday.

JPMorgan on Wednesday maintained its overweight rating with a target price of ₹3,000, implying an upside of 23% over Thursday's closing. The broking firm said Titan's valuations are comparable to other large discretionary names, and current levels are a good entry point as it has better earnings growth.

So far in 2023, the stock has declined roughly 5% as against the Nifty's decline of 6.2% in the period. "The ADIA investment in Lenskart had triggered positive sentiment in Titan's eyewear business," said Guarang Shah, senior VP at Geojit Financial Services.


"But purely on the fundamental front, gems and jewellery, wristwatches, eye care, and accessory businesses are doing quite well, and the fact that the prices of gold have also been moving up could translate into positivity for the company over a longer period."

The Tata Group company is planning to add 500 eyewear stores over the next two to three years. Titan's eyewear division has posted sales of around ₹800 crore in FY22 with a profit before tax of ₹38 crore, according to the company's annual report.

"The turnaround in the Caratlane, watches, and eyewear divisions and continuity in their profitability potential are not yet priced in," said Shirish Pardeshi, analyst, Centrum Broking.

Some analysts, however, feel the ADIA investment in Lenskart may not push up Titan's valuations in a big way.