The stock trades at 171 PE. It is generally advised not to take a fresh position at such elevated PE. But if you have a thesis for investing and can follow the developments in the company which influence the price in the future, you can still invest at these levels because some big companies get bigger.
As these type of companies have long growth ahead of them it will be better to invest in a SIP kind of way - buy every month, or follow a staggered approach - invest a portion and wait for some time, say the next quarterly result, understand what is happening and invest more as you gain confidence and conviction, if the results are in line with your thesis. If you feel there is something wrong in your thesis or you have overlooked a critical point, you can simply stop investing.
But define long-term first, is it 3 years, 5 years of 15 years and be clear of your expectation as you are investing at a very high PE, even if the price will not correct there will be time correction as the PE is very high and the price may not move for a few years.
Disc : Invested.
The Company recorded strong revenue growth of 60% for the overall Q4 due to low base of March '20, with
revenue growth of over 36% in the comparable January & February months. Q4 reported revenue growth
was further aided by a large B2B gold coin order that contributed ~8% of the growth.
Titan entering into Aerospace and Automation in US market
AR 2020-21
Impressive show for Q2, Mr Market has sensed and factored it ahead
Sales FY 22 - Q1 at 3500, Q2 at 7800 cr+( 75%+ on last year), Q3 being festive will be better than Q2 at similar QoQ growth as last year as well as FY19 range of 35-40% puts it at 11000 -12000cr range, Q4 we can say a normalized 20% CAGR from Q4 20 puts it at 7000 cr or like last year pattern it can be closer to Dec qtr I.e. 10000 cr
Summary - 30000 cr to 33500 cr range for FY 22, let’s assume Lower studded ratio means, slightly lower op margins but better than last year, long term averages has been 10%, they can do around 10 to 11% range for year, i.e. 3000 to 3500 cr range.(mid point aligns with long term 20% CAGR trend).
At 190K cr mkt cap, it’s at 6X sales, 50 to 60X EBDITA Now here is a biz which is going to grow at 20%+( tested in Corona times and came out with flying colors), have multi decade runway, is innovative and aggressive at unorganized to organized play, good management pedigree, Huge opportunity size in all business lines.
Key monitorable
- Jewelllery biz margins and H2 commentary , good around 11%, great above 11%
- Marketshare commentary
- Surprise element per press release - automobile biz received ever highest deal and sizable opportunities in EV space - this could be very interesting if scalable
- Eyewear has seen a turnaround and been a higher margin segment in Q2 and Q3 21( margins at 18% are much higher than Consol 11-12%), expect this segment to surprise further and deliver 600-700cr revenue at high teen margins on normalized basis ( Q1 22 was hit due to covid)- this segment of business could get re-rated from a loss making to a profitable and predictable growth franchise in post corona digitized world.( lenscart around 900-1000 cr revenue is valued at 20000 cr, Titan eyeware is at around 600 cr-700cr with higher margins)
Invested
Listen to RJ at 16:35. Must have congratulated team TITAN atleast 10 times. According to him the best qtrly results in his 20 years of ownership.
Earnings Presentation
Financials
https://www.bseindia.com/xml-data/corpfiling/AttachLive/7ba952f2-9735-4f5b-91b1-f6a22e2d416e.pdf
Interesting to note that Titan subsidiary (TEAL-Titan Engineering and Automation Ltd) figures in Top 10 Automation companies of India along with giants like GE/ABB/Siemens/Honeywell/L&T.
Q3FY22 Results
Analyst Transcript
Investor Presentation
Financials
Looks like a positive development for Titan especially now that it wants to establish international foothold in jewellery division. Middle East has a large Indian diaspora with great brand recall of Titan.
Does increase in gold price positively effects Tanishq sales and net profit?
I do understand that with increase in gold price, jewelry would become more expensive and subsequently high price will be passed on to its customers(upto some extent). But gold for Jewelry mfg is mostly imported in India, so sales will rise but cost of materials will also rise which will negate the difference and have marginally no impact on net profit.
Please correct me if I’m wrong.
Risk is sale of jewelry will also go down as few customers will wait for price to come down.
Cheers
Titan subsidiaries are really something to watch out for. This signing is also futuristic but good to track.
TCL North America Inc. (TCL Inc) incorporated in the State of Delaware, USA, is a wholly-owned subsidiary of Titan Company Limited. TCL Inc has been incorporated to carry out the business of Jewelry Retailing.
Great Heights Inc USA - are also into lab-created diamonds. Promtoter of CSR initiatives like LGBTQ marriage rights etc. Good to be linked i think