Consumer discretionary stocks are rallying after seeing price and timing correction. According to domestic brokerage and research firm ICICI Securities, the long-term price structure remains positive and recent profit booking offers a fresh entry opportunity with favorable risk reward.
Its preferred stock pick within the consumer discretionary space is Titan Company as it expects it to outperform as it recorded a breakout above a descending channel that had hit the last three months, which is likely to resume upward movement. signals, thus offering a new entry opportunity.
The demand for buying in the then stock is seen emerging from the support area of 1,800-1,900 as this is the confluence of the rise in the 100-week EMA, which has acted as a historically strong support over the past decade and a 61.8% retracement of the previous major rally from May 2021 to October 2021 ( 1,400-2,677) indicate an overall positive structure,” the note said.
brokerage hopes titan share To continue our current positive momentum and move forward 2,480 (Target Price) with stop loss 2,045 and a time horizon of three months.
“Titan’s Jewelery division (85% of revenue) has registered an impressive 17% revenue CAGR during FY18-22, while the overall industry has shown a minuscule to marginal growth during the same period. Balance Sheet Strength (FY22) : To achieve sustained market share without compromising on RoCE 33%, cash and investment): 1500+ cr) has led to multiple expansion of P/E over the years,” ICICI Securities highlighted.
Estimated revenue CAGR of 20%, 30% in FY22, FY24E respectively, coupled with healthy RoCE (33%+) makes Titan one of the best compounding stories. Management also disclosed its ambition on the watches and wearables business, targeting the revenue of 10,000 crore and EBIT margin of 18% till FY26. Titan is a structural growth story and appears to be a major beneficiary of the shift from unorganized to organized in the Indian jewelery market.
As per the recent shareholding pattern on BSE, Indian veteran investors and stock market traders Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala hold 3.98% and 1.07% stake respectively in the Tata group company.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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