Titan shares rally over 7%; what makes brokerages bullish on Tata Group stock post Q1 business update? Check target prices

Tata Group stock Titan rallied more than seven per cent in Thursday's intraday trade after the company posted strong sales number in its business update for the quarter ended June 30, 2022.  Reacting to the strong numbers, Titan shares jumped 7.7% to Rs 2170.95 apiece on the BSE. Interestingly, the market cap of the company also surged by Rs 12,000 crore in early trade on Thursday. Against Rs 1.79 lakh crore on Wednesday, the m-cap of this Tata group company surged to 1.1 lakh crore. Around 12 pm, the market cap stood at 1.88 lakh crore.  

Rakesh Jhunjhunwala Portfolio Stock 

Earlier, Titan company, also the favourite stock of billionaire investor Rakesh Jhunjhunwala, said its sales in the April-June quarter had jumped nearly three-fold on a year-on-year basis. 

Jhunjhunwala and his wife Rekha Jhunjhunwala jointly own a 5.05 per cent stake in Titan in the quarter ended March 31, 2022. Shareholding update on Titan for June quarter was yet to be made public. 

Titan Q1 Business Update 

"Sales in Q1 FY23 grew 205 per cent year-on-year (YoY) on a low base and clocked a 3-year CAGR of 20.5 per cent over Q1 FY20," Titan said in a regulatory filing on Wednesday.  

While its jewellery division, which contributes around 85 per cent of its revenue, reported 207 per cent growth and added 19 new stores during the quarter, taking the total store count to 463. 
"The Division had a good start to FY23 with robust sales on the auspicious occasion of Akshaya Tritiya in May month after 2 years of COVID induced lockdowns in this period. On a low YoY base, revenues nearly tripled, clocking a growth of 207 per cent," Titan said. 

What Makes Brokerages Bullish on Titan?  

Meanwhile, brokerage houses have maintained a bullish stance on the counter and recommended a 'Buy' on this gems and jewellery counter.  

The most aggressive target has been set by global brokerage firm HSBC, which sees over 56% upside on the Tata Group stock. The upside on the counter has been calculated on its previous closing price of Rs 2013.40 per share.  

Revising the target from Rs 3,000 to Rs 3150 post strong q1 business update, the brokerage maintained a buy on the counter.  

Similarly, Macquarie maintained an outperform rating with a target price of Rs 2800, previously Rs 2750.  

Being bullish on the Titan Company, Morgan Stanley says q1 numbers hints a healthy trend and assigned overweight rating with a target price of Rs 2621.  

Likewise, CITI maintained a 'buy' with a target price of Rs 2890 per share.  

Meanwhile, domestic brokerage house Centrum Broking said Titan’s Q1FY23 business update point out that company has witnessed near normal quarter reporting revenue growth of 205% in India driven by low base, wedding season, stable gold prices and network expansion.   

It expected continued strong revenue momentum for jewelry led by forthcoming festive season being strong due to deferred weddings from Q4, as customers have postponed the purchases due to rising gold prices in Q4. 

"We expect with geo-political issues to be settled soon, reflecting commodity prices to fall, that could induce advance purchases for future. Nonetheless, mandatory hallmarking is taking speed and will have positive impact benefiting organised players like Titan. We remain positive and expect strong demand condition across divisions to drive revenues and margin expansion. We retain BUY with a target price of Rs 2,817," added the brokerage house..