Titan's Q1 Buoyed By Onetime Gains, Long-Term Outlook Intact, Says PL Capital Maintaining 'Buy'

Titan's long term outlook remains positive given sustained focus on improving product mix to enable maintain current margin levels and strong new buyer growth, change in focus on light weight jewellery (9,000 and 14,000) to cater to sub Rs 50,000 consumer which is likely to drive value growth and watch business to continue see strong momentum in medium to long term led by unique designs and innovations.

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PL Capital Report

Titan Company Ltd. reported a robust Q1 led by 400 bps positive impact of revaluation in watch business Ebit margin and 50 bps positive impact of MTM gain from hedging in jewellery business. However, we remain cautious in near term given-

1. rising inventory costs due to higher gold prices (Rs 75 billion increase in FY25) will result in higher interest burden in coming quarters as store openings accelerate in an environment of rising gold prices.

2. Demand outlook remains hazy as gold prices remain at all time high levels and

3. recent tariff led geopolitical uncertainty can add to demand pressures.

Titan's long term outlook remains positive given-

1. sustained focus on improving product mix to enable maintain current margin levels and strong new buyer growth,

2. change in focus on light weight jewellery (9,000 and 14,000) to cater to sub Rs 50,000 consumer which is likely to drive value growth and

3. Watch business to continue see strong momentum in medium to long term led by unique designs and innovations.

We estimate 27.5% PAT CAGR over FY25-27. We assign an SOTP based target price of Rs 3901 (Rs 3830 earlier). Retain Buy.

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