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Motilal Oswal Report
With competitive pressure, Titan Company Ltd. has been reducing the gold premium over its peers, and is also exploring alternatives to safeguard operating margins (such as reducing making charges, etc.). In the long term, the company's diverse portfolio instills confidence in sustaining healthy growth with structural drivers such as:
the expansion of target users in rising urban cities and the potential of the store network,
Titan's expanding customer base (new buyers contributing 45-50%),
multiple jewelry brands catering to consumers across income groups,
the rapidly changing consumer preferences (transitioning from unorganized to organized market),
further potential for market share gain (currently at 8%), and
the increasing number of women and young people entering the workforce.
We model 17%, 20%, and 22% revenue, Ebitda and profit after tax compound annual growth rate during FY24-26, respectively. Titan's valuation is expensive, but its superior competitive positioning (sourcing, studded ratio, consumer trust, youth-centric, reinvestment, etc.), and business moats are not easily replicable.
Reiterate Buy with a target price of Rs 4,000 (premised on 65 times FY26E earnings per share).
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