One-off expenses hit Jhunjhunwala’s Rs 10,700 cr stock bet in Q4. What’s next?

NEW DELHI: Titan Firm’s 7 per cent drop in web revenue in March quarter was largely as a result of Rs 120 crore bills associated to voluntary retirement and ex-gratia bonus. The quarter was additionally affected by working challenges and gold worth volatility, resulting in flat revenues and weak margins on unfavourable fastened price leverage.

The administration does see a powerful development, due to uninterrupted wedding ceremony and festive gross sales forward after two years of lockdowns. Analyst worth targets differ, suggesting single-digit potential upside of as much as 28 per cent forward.

JPMorgan stated This fall print has led to a pause within the earnings improve cycle, even because it took observe of wholesome demand momentum in April. Income development trajectory will probably be key for the share worth efficiency, it stated whereas suggesting a impartial ranking on the inventory with a goal of Rs 2,575.

ICICI Securities stated Titan inventory has seen a time correction within the final six months, and accurately so.

“We consider it was in a zone the place the valuation was stretched, expectations have been excessive and the corporate needed to materially shock (for additional up transfer). We do observe that Q3 was a blockbuster quarter however that occurred for many discretionary classes. The This fall consequence was nearly first rate, in truth weaker than initially anticipated,” it famous whereas suggesting a goal of Rs 2,550.

That stated, the brokerage stated its optimism stays intact as Titan is one firm the place the capabilities to translate the chance to earnings is excessive.

Ace investor Rakesh Jhunjunwala and his higher half Rekha owned 5.1 per cent stake within the Tata Group agency, which is price Rs 10,703.90 crore as of Monday.

The jewelry maker stated its standalone revenue for the March 2022 quarter declined 7.18 per cent year-on-year to Rs 491 crore from Rs 529 crore. Income from gross sales of operations for the quarter fell 3.46 per cent to Rs 6,749 crore from Rs 6,991 crore. The adjusted margin (earlier than distinctive objects) got here in at 13.1 per cent.

The jewelry enterprise registered a 4 per cent YoY drop in income to Rs 6,132 crore from Rs 6,397 crore in Q4FY21. Jewelry’s EBIT margins (adjusted for stock beneficial properties) was flat YoY at 11 per cent for the quarter.

The watches and wearable enterprise reported a 12 per cent enhance within the revenue to Rs 622 crore from Rs 555 crore earlier whereas eyecare enterprise reported a 6 per cent YoY rise in income to Rs 134 crore.

Edelweiss stated along with weak gross sales within the jewelry phase, margins, significantly in non-jewellery undershot, which drove a miss. Ebitda got here in 18 per cent beneath estimate, it stated, including that there are uncertainties on margin sustainability and demand given gold worth volatility.

“Aside from this quarter (which incorporates one-offs), Titan has delivered on margins. And we don’t see incremental developments to consider margins will contract forward. Even on development outlook, April demand has already recovered whereas price-related volatility prior to now has evened out quickly. Therefore, we keep our estimates and goal 65 instances FY23 Ebitda , which yields a goal worth of Rs 3,065; retain ‘BUY’. Titan stays amongst our high picks,” it stated.

Emkay World stated This fall revenue was 15 per cent decrease than its estimates, largely as a result of bills associated to voluntary retirement/ex-gratia bonus. Adjusted for this, Emkay stated Ebitda margin was in step with its estimates however practically 150 foundation factors decrease than consensus estimates.

“In anticipation of a powerful season and low base, working capital has greater than doubled to Rs 6,200 crore, resulting in a unfavourable FCF of Rs 1,000 crore in FY22. However, we count on it to normalise in FY23E. Retailer additions have been sturdy, resulting in 11 per cent development in retail house in FY22,” Emkay stated whereas reducing its goal on the inventory to Rs 2,775 from Rs 2,900 earlier.

Motilal Oswal Securities stated the inventory’s near-term multiples seem costly, however its lengthy runway for worthwhile development warrants premium multiples.

Titan, it stated, has a powerful development runway, given its market share of lower than 10 per cent and continued struggles confronted by its unorganised and organised friends.

“Its medium-to-long-term earnings development visibility is nonpareil. Regardless of the volatility in gold costs and Covid-led disruptions, its earnings CAGR has been stellar (24 per cent) for the previous five-years ending FY22. We count on this development to proceed, with over 20 per cent earnings CAGR within the subsequent couple of years,” it stated whereas suggesting a goal of Rs 2,900 per share.