Titan Company Upgraded to 'Hold' by MarketsMOJO, Shows Strong Management Efficiency and Long-Term Growth

Titan Company, a leading player in the diamond and gold jewellery industry, has recently been upgraded to a 'Hold' by MarketsMOJO on September 5, 2024. This decision is based on the company's strong management efficiency, with a high return on capital employed (ROCE) of 20.00%. Additionally, Titan has shown a healthy ability to service its debt, with an EBIT to interest ratio of 11.93.

The company has also displayed a consistent long-term growth, with an annual growth rate of 20.77% in net sales and 20.60% in operating profit. Technically, the stock is currently in a mildly bullish range, with an improved trend from sideways on September 5, 2024. The MACD and Bollinger Band technical factors also indicate a bullish trend.

One of the key strengths of Titan is its high institutional holdings, which stand at 29.47%. This indicates that these investors have better resources and capabilities to analyze the fundamentals of the company compared to retail investors. With a market capitalization of Rs 3,20,402 crore, Titan is the largest company in the sector, constituting 73.47% of the entire industry. Its annual sales of Rs 52,453 crore make up 14.87% of the industry.

However, the company did face some negative results in June 2024, with its operating profit to interest ratio at its lowest at 5.42 times. The profit before tax (PBT) less operating income (OI) also fell by 16.6% at Rs 853 crore, and the profit after tax (PAT) fell by 18.1% at Rs 715 crore. Additionally, with an ROCE of 21.7, the company's valuation is considered expensive with an enterprise value to capital employed ratio of 15.8. However, the stock is currently trading at a discount compared to its average historical valuations.

In the past year, while the stock has generated a return of 18.67%, its profits have only risen by 7.3%, resulting in a PEG ratio of 13. This indicates that the stock may be overvalued. Furthermore, Titan has underperformed the market in the last year, with a return of 18.67% compared to the market's (BSE 500) return of 37.08%.

Overall, while Titan Company has shown strong management efficiency and long-term growth, it has faced some challenges in the recent past. The stock is currently trading at a discount compared to its historical valuations, but it may be overvalued based on its PEG ratio. Investors may want to hold onto the stock for now and monitor its performance closely.