Titan Gets Coverage Initiation From Nomura; Brokerage Sees Strong Long-Term Growth
Nomura believes Titan’s sales and margins have reset to a new normal, reinforcing its long-term growth trajectory.
Nomura has initiated coverage on Titan Company Ltd. with a ‘Buy’ rating and a target price of Rs 4,275, citing steady demand and the company’s strong positioning within the discretionary consumption space.
The brokerage noted that "Titan delivered a strong sales compound annual growth rate of 22% over FY23-25," and its margins were under some pressure. Given that margins reset to a new normal, we believe most of the realistic headwinds have been factored in and are behind, and that certain other concerns are overestimated and might not materialise."
The brokerage expects organised players like Titan to continue growing at 1.5 times the industry rate, supported by mid-teens growth.
Nomura believes Titan’s sales and margins have reset to a new normal, reinforcing its long-term growth trajectory. While Q2 is expected to be relatively weak, Nomura sees this as a good entry point for investors, anticipating a recovery from the second half of the fiscal year.
It noted, "we believe most headwinds will be behind post 2Q, and we expect a recovery in 2H supported by wedding and festive demand-store openings. Strong structural story is intact, the company is better placed versus domestic peers on a risk-weighted basis."
The brokerage also noted that Titan is a key beneficiary of the rising affluent and elite, and it is the fastest-growing player in the overall jewelry industry as the store deepens its store reach in Tier 2, 3, and 4 towns
The firm maintains that Titan remains a strong structural story and is better positioned than domestic peers on a risk-adjusted basis.
The brokerage also noted that, Titan's contribution of wedding jewellery is expected to rise to 25% of overall sales over the medium term, up from 20% currently, though still below the industry average of 55%.
