Titan hits over 4-month high on expansion plan; stock zooms 11% in 1 month

Shares of Titan Company (Titan) hit an over four-month high of Rs 2,555, gaining 4 per cent on the BSE in Friday's intra-day trade as the Tata Group's jewellery company mulls expansion plan in the US. The stock was trading at its highest level since April 6, 2022. It hit a 52-week high of Rs 2,767.55 on March 21, 2022.

As per media reports, Titan is planning to take its jewellery brand Tanishq to the US and other West Asian markets as part of its long-term strategy to tap into the demand from large Indian diaspora and Non-Indian Resident (NRIs) communities.

Titan expects its sales to be higher by 15-20 per cent this festive season compared to last year, C K Venkataraman, Managing Director, Titan said during the launch of its initiative "Titan Shaurya". CLICK HERE FOR FULL REPORT

This (July-September) quarter will be the first festive quarter without Covid-19 related restrictions since 2019.

Tanishq had opened its first international store in November 2020 in Dubai and currently has four stores at international locations. The company is planning to open 20-30 stores in the next 2-3 years in North America and West Asia which would enable it to serve the vast diaspora of people of Indian origin residing in these international locations, ICICI Securities said in a note.

On the domestic retail front, the company is expecting a strong festive season and is planning to adopt a combination of product innovations, new launches and marketing investments besides promotional offers to capture the expected demand, the brokerage firm said.

Meanwhile, in the past one month, Titan has outperformed the market by surging 11 per cent, as compared to 7 per cent rise in the S&P BSE Sensex. However, in the past six months, the stock has underperformed by gaining 3 per cent, against 6 per cent rally in the benchmark index.

Titan began FY23 on a strong note with revenues (excluding bullion sales) growing by 3.0x to Rs 8,975 crore (including bullion 2.7x to Rs 9,443 crore). On a 3-year CAGR basis revenues grew by 20 per cent YoY with jewellery sales growing by 23 per cent CAGR in the same period.

"Titan is aiming to grow its revenue at CAGR of over 20 per cent over FY2022-27 on back of its ambitious growth plan in the medium term. This along with consistent improvement in margins will help cash flows improve strongly in the coming years. FY2023 will be a strong year for the company on back of low base in the core businesses," according to analysts at Sharekhan.

The company's strong growth outlook, industry tailwinds in the medium term and strong balance sheet makes it a best play in the retail space. Hence we maintain our Buy recommendation on the stock with an unchanged price target of Rs 2,900, the brokerage firm said in a August 5 report.