Gladiator Stocks – Titan Company: ICICI Direct

According to ICICI Direct, Buy Titan Company in the range of Rs 1465.00–1490.00 for target price of Rs 1675.00 with stop loss of Rs 1378.00. Time Frame: Six months

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ICICI Direct’s research report on Titan Company

Strategy

Buy Titan Company in the range of Rs 1465.00–1490.00 for target price of Rs 1675.00 with stop loss of Rs 1378.00. Time Frame: Six months.

Technical View

The stock has undergone healthy retracement over the past three months and formed a higher base at the lower band of rising channel and the previous major breakout area above the yearly high of CY19 (Rs 1390). Hence, it offers a fresh entry opportunity with a favourable risk reward set up. We expect the stock to resume its primary up trend and gradually head towards Rs 1675 levels in coming months as it is the 123.6% external retracement of the last three months breather (Rs1621-1396). Key point to highlight is that, over past 12 weeks, the stock has retraced just 50% of preceding nine week’s up move (1154-1621). Shallow price retracement signifies robust price structure and a higher base formation.

Fundamental View

Titan Company is a major player in the organised jewellery market with share of ~6%. Tanishq’s penetration is still at a very nascent stage in the Indian jewellery market. This provides immense opportunity for Titan to enhance its market share, going forward. Recent regulatory changes such as gold hallmarking, GST have turned out to be highly favourable for organised players like Titan, leading to market share gains from unorganised players. The market share gains are visible as Tanishq reported robust revenue CAGR of 19% in FY16-20. Since the outbreak of the pandemic, perception of gold as an asset class has seen healthy traction. Demand for plain gold jewellery, gold coins has zoomed owing to a surge in gold prices. Titan is among few discretionary companies in our coverage to have reverted back to heathy sales growth. Titan’s jewellery division witnessed strong revival with revenue growth of 16% YoY in Q3FY21. Revenue trajectory accelerated further in January with jewellery division seeing 28% YoY growth driven by 16% growth in studded ratio.
The healthy growth revival depicts the inherent strength of the Tanishq brand and continuous focus on market share gains. Furthermore, a revival in share of studded ratio augurs well for overall margin profile.

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