Jewelry-maker Titan clocks new all-time high, shares end 3% higher - should you buy?

The shares of jewelry-maker Titan were seen at new levels in Monday’s trading session, after Brickwork Ratings India gave stable ratings on the company’s cash credit and gold loans. Titan shares jumped by nearly 3% in today’s trading session and even clocked an all-time high of Rs 1,269.50 per piece. The company has been touching new heights since the start of 2019. In fact, Titan shares are seen as a money making magnet and this time, Sharekhan has given positive FY20 outlook along with a buy rating. 

In its research note, Sharekhan says, “ FY2019 was one of the best years for Titan. The watches business grew by 16.8%, driven by 12% volume growth (first time in the past five years). EBIT margin of the business improved by 110 BPS to 10.9%. Titan remains the number one brand in the domestic watch segment, registering 23% growth in FY2019 (gained 2% market share).”

Going ahead, the note explains that, digitalisation is one of the key growth drivers and the company is focusing on wearables (under the Fastrack brand) and is planning to launch adventure gear watches, which will help to maintain double digit revenue growth in the near to medium term. Improvement in profitability of the watches segment would be the function of improvement in revenue mix and higher sales volume in the coming years. 

Following which, Sharekhan’s note said, “We have increased our earnings estimates by ~3% and 6% for FY2020 and FY2021, respectively, to factor in higherthan-earlier-expected growth in the jewellery business. Management expects the jewellery and watches segments to deliver double-digit revenue growth in the near term and eyewear business is expected to improve profitability with scale. Taneira (handloom saree) and Skinn (fragrances) are expected to be big opportunities in the long run and will be one of the key revenue and profitability drivers by FY2023. Caratlane, subsidiary of Titan, is expected to be EBIT positive in FY2020. ”

Hence, Sharekhan believes’ Titan’s revenue and earnings to report a CAGR of 18% and 23% over FY2019-FY2021. We maintain our Buy recommendation on the stock with a revised price target (PT) of Rs. 1,375 (in-line with increased earnings estimates).”