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Dolat Capital Report
Titan Company Ltd.'s Q2 FY24 revenues excluding bullion sales were in line with estimate. However, Ebitda and adjusted profit after tax came ahead of our anticipation.
Increase in studded jewellery contribution would help improve Ebitdam, going ahead.
Further, benefits of low cost inventory fade out completely and plain gold jewelry sales increased during Q2 FY24, impacted the margins. Going ahead, the company expects 12-13% steady state margins in the jewelry business (excluding bullion sales).
Though Titan's Q2 profitability was ahead of our estimate, we have maintained our FY24E/FY25E earnings per share estimates at Rs 42.5/48.4 as we believe that H2 profitability would remain under pressure due to low diamond prices.
We have introduced FY26E at Rs 54.9. Valuing the stock at 58 times FY26E EPS we arrive at a target price of Rs 3,185. Maintain 'Sell'.
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