Titan has been on our radar as it has displayed a strong earnings track record and showed resilient trends. We are enthused by the robust growth guidance given by the company. For FY20, Titan has given an optimistic 20% revenue growth outlook.
Titan is a retail-focused and mainly operates in three segments viz Jewelry (Tanishq), watches (Titan FastTrack) and eyewear. In FY19, the jewelry division grew 22% in FY19, watch division grew 16% and the eyewear segment displayed 23% revenue growth. The company is consistently expanding and added 40 new Tanishq stores, 30 WOT stores, 22 Fast Track stores, and 12 Helios stores during FY19.
The structural story in Titan seems to remain intact as it has managed to grow its jewelry business ~21% in spite of an increase in gold prices and muted Jewelry demand. Moreover, it has given an optimistic 20% guidance across verticals on a very high base of FY19. Market estimates for Q4FY19 year-end results are also encouraging with a 23% YoY revenue growth and a 43% YoY EBITDA growth. We believe the story can continue and turn positive on Titan from a positional standpoint.
Titan corrected majorly from the highs of 1000 levels to 700 odd. That’s a good 30 percent cut from the highs. But since then has regained all the lost ground and made new highs. Technically the break of the old highs at 1000 levels was the first indication that the bulls were in charge. The retest of the zone post the breakout after three weeks validated the break. The stock is making higher tops and bottoms on the weekly charts and that’s an indication of a strong uptrend. On the current pullback the RSI is taking the bear zone of 65 as support . This is indication that the momentum is strong. The Fibonacci extensions drawn from two pivot points is giving Fibonacci confluence zones at 1171 and then 1440. The second target at 1440 is some 30% from the current levels. Hence this stock looks a good buy at current levels of 1095.