Reduce Titan Company, target price Rs 2150: HDFC Securities

Securities has reduce call on with a target price of Rs 2150. The current market price of Titan Company is Rs 2396.7.

Titan Company, incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 213614.67 Crore) operating in Gems and Jewellery sector.

Titan Company key Products/Revenue Segments include Jewellery, Watches, Precious & Semi Precious Stones, Eyewear, Others, Other Operating Revenue, Scrap, Other Services for the year ending 31-Mar-2022.

Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 11698.00 Crore, up 26.82 % from last quarter Total Income of Rs 9224.00 Crore and up 15.89 % from last year same quarter Total Income of Rs 10094.00 Crore. Company has reported net profit after tax of Rs 912.00 Crore in latest quarter.

The company’s top management includes Mr.S Krishnan, Mr.Bhaskar Bhat, Mr.Sandeep Singhal, Ms.Sindhu Gangadharan, Dr.Mohanasankar Sivapraksam, Mr.Pradyumna Vyas, Mr.B Santhanam, Mr.Ashwani Puri, Mr.C K Venkataraman, Mr.N N Tata, Ms.Jayashree Muralidharan. Company has B S R & Co. LLP as its auditors. As on 31-12-2022, the company has a total of 89 Crore shares outstanding.

Investment Rationale
Overall profitability disappointed at the company. Jewellery EBITM at 11.9% (vs HSIE: 12.5%) declined 232bps YoY as competitive intensity continues to heighten; benefits from high diamond prices wore off. Non-jewellery profitability disappointed too. The brokerage maintains its FY24/25 EPS estimates. However, it upgraded the stock to a REDUCE (Earlier SELL) with an unchanged DCF-based TP of Rs 2,150/share (implying 46x Dec-24 P/E) as the downside is now limited, post the recent 15%+ stock correction.

Promoter/FII Holdings
Promoters held 52.9 per cent stake in the company as of 31-Dec-2022, while FIIs owned 17.53 per cent, DIIs 10.9 per cent.