Titan hits record high on hopes of strong Q2FY23; stock up 44% in 4 months

Shares of Titan Company gained 2 per cent to hit a record high of Rs 2,790 per share in Monday’s intra-day trade, on hopes of strong September quarter (Q2FY23) earnings. The stock has surpassed its previous high of Rs 2,767.55, which it had touched on March 21, 2022.

In the past four months, it has soared 44 per cent and 53 per cent from its 52-weeek low of Rs 1,827.15 on July 1, 2022.

The board of directors of Titan is scheduled to meet on Friday, November 4, 2022 to consider and approve the unaudited financial results for the quarter and half year ended September 30, 2022.

In its quarterly business update, the company said that the overall sales grew by 18 per cent YoY in Q2FY23. Jewellery, excluding bullion, sales grew by 18 per cent, while watches & wearables sales were up 20 per cent. The company added 91 new stores across segments in the quarter ended September 2022.

Titan has been the standout performer among all of its consumer peers, in terms of revenue, earnings, as well as stock price performance over the past five years.

Analysts at Motilal Oswal Financial Services (MOFSL) believe that the company maintained its strong growth trajectory (three year Revenue/PAT CAGR at 20 per cent/27 per cent), even during the COVID-impacted period (FY20-FY22) – at a time when most retail peers were struggling.

"This was achieved, despite a near washout in Q1FY21 due to the first COVID wave and much lower than usual sales in Q1FY22 due to the second wave," analysts at MOFSL said.

While the medium and long term growth prospects on revenue and earnings remain extremely attractive, factors like extremely high festive season base of the past two years could be an overhang for the business. 

"The risk of an escalation in gold prices due to global growth concerns, which can lead to a postponement of demand for a few months, even as the medium term impact is limited; further increases on gold import duty due to a weak fiscal and BoP situation; a delay in a recovery of the studded segment (which is still not back to pre-COVID levels), which can have an impact on margin and earnings growth," the brokerage firm added.