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Prabhudas Lilladher Report
We cut our FY24/FY25 earnings per share estimates by 4.9%/2.3% as we cut Ebit margins in Jewelry by 50 basis points to 12.3% (lower end of Titan Company Ltd. guidance of 12-13% band) and 50 bps each in watches and eyewear.
We believe Titan Company is investing for future growth which is reflected in rationalisation of physical gold premium, increased advertising and consumer activations and exchange schemes in a tough demand environment, which bodes well for long term growth.
Demand trends in July remain strong across segments which gives us confidence of pick up in margins in coming quarters. We expect Titan Company is creating multiple growth levers led by-
jewelry segment gains due to network expansion, regional thrust and higher growth in sub brands like Mia, Zoya and Caratlane,
Omni-channel strategy across jewellery, watches and eyewear,
new growth drivers like Caratlane, Titan Eye+, Taneira and
strong growth in wearables with smartwatch in mass segment.
Titan Company is an emerging lifestyle play with presence in Jewellery, Watches, wearables, dress material, fragrances and handbags which will help sustain premium valuations.
Titan trades at 56.6 times FY25E earnings per share with 17.7% EPS compound annual growth rate over FY23-25. We assign discounted cash flow based target price of Rs 3240 (Rs 3242 earlier). Retain 'Accumulate'.
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