Titan surges to fresh record high after crossing Rs 1 lakh crore mcap; should you buy stock?

Rising for the eighth consecutive session, shares of Tata Group’s jewellery major Titan Company surged on Thursday morning to a fresh record high. Titan share price gained as much as 1.97% to hit the day’s high at Rs 1,181.70 on BSE. Yesterday, the surge in the stock led Titan to reclaim the Rs 1 lakh crore in market capitalisation. Titan commands a whopping 1.04 lakh crore in market capitalisation, data from BSE showed. The shares have been on a rirsing spree after the firm reported strong Q4 results last week. For the Jan-Mar period, Titan Company posted a standalone net profit of Rs 296.4 crore, up 4.4% as compared to the corresponding period previous fiscal. The firm had reported a  net profit of Rs 282.1 crore for Jan-Mar period in Q4FY18.

The jewellery division of Titan reported strong revenue growth of 21 percent. The earnings before interest and taxes or EBIT margin of Q4 stood at 12.8 percent, while for the whole year stood at 12.2 percent, an year-on-year growth of 30 basis points. In the March quarter, the profit for the company may grow in the range of 19 to 37 per cent and revenue is likely to surge by 15 to 23 per cent supported by jewellery as well as the watch and eyewear segments.

Taking stock of the reported results,  Prabhudas Lilladher said that it maintains a positive outlook on the Titan shares, post management interaction, given guidance of 22% sales growth in Jewellery, double digit growth in watches and sustained growth and scale up in other ventures. The research firm has a target stock price of Rs 1,264 on the shares. Prabhudas Lilladher estimates a 25.8% PAT CAGR over FY18-FY21 for Titan. The brokerage values the stock at 45xFY21 EPS, at the target stock price. Titan remains one of the best plays on rising discretionary spends and increasing maturity of consumers in middle India, said the report.

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