Investment rationale for Titan according to IIFL Securities
- Titan reported results above our estimates, with an Ebitda overrun of 22% thanks to higher than expected jewelry operating margins (13% excluding bullion). Sales were up 78% year-on-year, with all segments showing strong growth.
- The margin overrun was driven by operating leverage (32% 2-year exchange rate in the jewelry business), although the studded mix did not fully normalize: 30% this quarter, above the 26 % one year ago.
- Rising share of wallet for jewelry, strong wedding demand and pent-up demand are some of the factors that contributed to growth this quarter. Wedding sales were up 81% year-over-year on improved consumer confidence after the second wave of COVID.
Investment rationale for Tata Consumer Products
Brokerage firm Geojit said “During Q3FY22, revenue increased by 4.5% YoY to Rs. 3,208cr (+5.8% QoQ, +4% cc), helped by strong volume growth in the India business, particularly in the Sampann portfolio (+39% volume growth year-on-year), as well as in the salt category due to price increases, as well as strong sequential recovery in tea portfolio, Soulfull and Starbucks EBITDA increased by 34.7% YoY to Rs. due to a high margin product mix Adj. PAT rose 24.0% YoY to Rs. 278cr.”
“The company’s new product offerings in Soulfull, the acquisition of the Tata Q business, as well as the expansion of offerings through its online D2C channel 1868 should help performance over the coming quarters. Meanwhile , its Tata Salt and Sampann portfolio should continue to perform well, helped by recent price increases and significant volume growth.Similarly, the beverages range, in particular its tea range, should see its margins improve with input cost reductions We estimate PAT to grow 21.4% FY21-24E CAGR and EBITDA margin to improve to 15.2% by FY24E We reiterate our Buy rating on the stock with a deferred target price of Rs. 862 based on 50x FY24E Adj. EPS,” says Geojit.
The stocks were selected from the IIFL Securities & Geojit brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.