Add Titan Company, target price Rs 2,520: Kotak Institutional Equities

Kotak Institutional Equities has add call on Titan Company with a target price of Rs 2525. The current market price of Titan Company is Rs 2312.85.

Titan Company, incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 211874.61 Crore) operating in Gems and Jewellery sector.

Titan Company key Products/Revenue Segments include Jewellery, Watches, Gold, Eyewear, Traded Goods, Precious & Semi Precious Stones, Other Operating Revenue, Other Services for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 10094 crore, up 33.73% from last quarter; Total Income of Rs 7548 crore and up 31.79% from last year same quarter. Company has reported net profit after tax of Rs 1012.00 Crore in latest quarter.

Investment Rationale
Titan’s 4Q print was underwhelming given - (1) flat jewelry sales impacted by gold price volatility, (2) jewelry EBIT margin at ~11% (underlying, excl. inventory gains on studded sales and one-off costs) was a tad weak, (3) eyewear sales and margins were impacted by channel correction and one-time costs. The management categorically indicated that it has set a very ambitious target for FY2023 and is geared to achieve the same. The brokerage tweaked estimates and maintained Fair Value of Rs 2,525 and recommended to ADD on dips.

Promoter/FII Holdings
Promoters held 52.9 per cent stake in the company as of 31-Mar-2022, while FIIs owned 18.4 per cent, DIIs 10.21 per cent.