Titan shares gain 2% after Q1 results. What are Citi, Motilal, two other brokerages saying?

Total income rose 40% YoY to Rs 20,753 crore during the quarter. The jewellery business continued to lead Titan's growth, with revenue from the portfolio rising 43% YoY to Rs 18,253 crore, excluding bullion and digi-gold sales. The company attributed the performance to festive purchases, Akshaya Tritiya sales and its exchange programmes, along with a relatively stable gold price environment during the quarter.

Buy, sell or hold Titan shares?

Citi has maintained its Buy rating on Titan Company and raised its target price to Rs 5,700 from Rs 5,075 earlier, implying an upside of around 15% from the current market price of Rs 4,943. The brokerage said jewellery revenue and EBIT growth remained strong after excluding bullion sales and one-offs, and expects Titan to deliver healthy double-digit revenue growth irrespective of gold price movements.Also read:Titan sees positive momentum in July; on track to beat FY30 growth targets: MD

Citi sees further scope for margin improvement from a lower contribution from gold-coin sales and a higher mix of studded jewellery. While plain gold jewellery saw some softness towards the end of July, trends have improved in recent days. The brokerage has also raised its FY27-29 EPS estimates and rolled forward its target multiple, supporting the increase in the target price to Rs 5,700.

A deterioration in macro conditions could prolong a slowdown in growth as Titan's revenue is linked to discretionary spending. Volatility in gold prices is another key risk, as steep price increases can weigh on demand, while investment buying tends to be lower margin.

Read more:How Rakesh Jhunjhunwala's old Tata bet created Rs 80,000 crore wealth after two years of flat returns

Emkay, with an Add rating and a target price of Rs 5,600, believes Titan has eased concerns around a possible slowdown in growth following the recent decline in gold prices and has reiterated its Analyst Day guidance of more than doubling revenue and EBIT over FY26-30, implying around 20% CAGR.

Despite significantly outperforming the Nifty over the last 12 months, Titan is trading at a 5-6% valuation discount to DMART and TRENT. The brokerage sees scope for further re-rating, supported by Titan's strong execution track record and favourable growth outlook. It has raised its valuation multiple to 60x, closer to its historical average.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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