The weak Q2 from Titan Company offers a good access point, says Nomura after initiating coverage with buy -rating

Shares of Titan Company can rise to 26.5% of the current level, according to the international broker Nomura, who has initiated coverage on the shares with a ‘buy’ rating and a target price of RS 4,275 per share.

Nomura believes that Titan is well placed to take advantage of the rapid growth in India’s prosperous and elite income classes, with a potential sales growth of 1.5-2 times GDP in the medium term.

The company also recovers from structural improvements in sales per store and per square foot, driven by a larger formalization, rising average ticket size and a higher contribution of wedding jewels – is expected to up to 25% of the turnover of 20% currently, although still under the branch average of 55%.

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Titan also expands its global footprint, whereby stores generally generate higher income than domestic points of sale. It is planning to open 50 Tanishq stores abroad in the medium term, an increase of 22 now, aimed at prosperous Indian Diaspora markets.

After the acquisition of non -listed DAMAS ranges, Titan also wants to use a broader global customer base, so that the income and profit mix further diversifies. However, most of this headwind will probably fade after the second quarter, with a recovery expected in the second half of the tax year, driven by festive and wedding question and new store additives.

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Nomura predicts a 24% CAGR in the profit per share between FY26 and FY28 and appreciates the share at 60 times its estimated income from September 2027-in general lines in line with its 10-year historical average.

Titan currently trades one standard deviation below the average of five years and offers a valuation comfort. Important risks include a delay in sales due to increased gold prices or rising competition and margin pressure of lab-grown diamonds.

In the past two years, Titan shares have largely moved aside, which are left behind the Nifty with about 25%, in the midst of concern about the potential threat of lab-cultivated diamonds to his high margin jewelry activities, so that the competition of new organized players and weaker foot traps in the middle of higher gold prices. Although the company delivered a strong 22% sales CAGR between FY23 and FY25, the margins were under pressure.

With margins that now reset to a new normal, Nomura believes that most headwind is already priced, while some risks seem exaggerated. It expects negligible impact on Titan’s growth, which projects 18% turnover and 19% EBIT CAGRs over FY26-28.

Shares of the company ended the day on RS 3,333, a decrease of 1.5% compared to the last closure of the NSE, weighed by the total weak market mood. The shares of Titan Company have fallen by more than 11% in the past year.

(Disclaimer: recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)