Jefferies has maintained its hold rating on Titan but raised target price to Rs 1,100 from Rs 920 after increase in earnings estimates by 6 percent for FY19-21.
Titan Company shares gained 5 percent to hit a 52-week high of Rs 1,044.30 on Monday morning as brokerage houses raised price target on the stock after the company reported strong earnings for December quarter.
The stock was quoting at Rs 1,031.90, up Rs 40.60 or 4.10 percent, amid high volumes on the BSE at 10:12 hours IST.
Global brokerage house Credit Suisse upgraded rating on the watches-to-jewellery maker to outperform from neutral and raised price target to Rs 1,175 from Rs 935 apiece after increase in its earnings estimates by 3-10 percent.
Higher gold prices have been aiding an already strong growth trajectory, said the research house which sees tailwinds from a strong wedding season.
CLSA also retained its outperform call on the stock and raised price target to Rs 1,100 from Rs 1,035 after revising EPS estimates by 2-6 percent as strong Q3 results drove earnings upgrade.
Exceptional performance in jewellery business was highlight of Q3 earnings and watches business faced margin headwinds on phasing out issue in A&P spends, the brokerage house said, adding the management is hopeful of a pick-up in jewellery sales in March.
Titan reported a healthy 43.5 percent on-year growth in third quarter consolidated profit to Rs 413.2 crore driven by revenue growth and strong jewellery business during festive season.
Revenue from operations during the quarter grew 34.6 percent year-on-year to Rs 5,871.5 crore with jewellery business growing 37 percent YoY.
The topline growth was driven by these new introductions, some successful activations as well as measured network expansion, the company said.
The income from watches increased 18.8 percent to Rs 641 crore and the eyewear business too grew a healthy 39.7 percent in Q3 to Rs 129 crore.
At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) grew 31.4 percent YoY to Rs 584.2 crore in Q3, but margin contracted to 10.3 percent against 10.5 percent YoY.
Adjusted EBITDA stood at Rs 654 crore for the quarter. During the quarter, there was an additional provision of Rs 70 crore made for investments as part of treasury operations in inter corporate deposits in the IL&FS group.
Jefferies has maintained its hold rating on Titan but raised target price to Rs 1,100 from Rs 920 after increase in earnings estimates by 6 percent for FY19-21.
"The company continued to execute strongly & gaining share in jewellery business. 48x FY20e PE fairly captured superior execution & strong brand franchise," the brokerage said.
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