PL Stock Report: Titan Company (TTAN IN) - Q1FY24 Result Update - Refueling for sustained growth - Accumulate
Titan Company (TTAN IN) - Amnish Aggarwal - Head of Research, Prabhudas Lilladher Pvt Ltd
Rating: ACCUMULATE | CMP: Rs2,977 | TP: Rs3,240
Q1FY24 Result Update - Refueling for sustained growth
Quick Pointers:
♦ Jewellery demand remains strong in July; FY24 EBIT margin guidance maintained at 12-13%
♦ Jewellery margin hit due to rationalization of physical gold premium, brand building and customer activation and diamond inventory gains in 1Q23
We cut our FY24/FY25 EPS estimates by 4.9%/2.3% as we cut EBIT margins in Jewellery by 50bps to 12.3% (lower end of TTAN guidance of 12-13% band) and 50bps each in watches and Eyewear. we believe TTAN is investing for future growth which is reflected in rationalization 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 TTAN is creating multiple growth levers led by 1) jewellery segment gains due to network expansion, regional thrust and higher growth in sub brands like Mia, Zoya and Caratlane 2) Omni-channel strategy across jewellery, watches and eyewear 3) new growth drivers like Caratlane, Titan Eye+, Taneira and 4) strong growth in wearables with smartwatch in mass segment. TTAN is an emerging lifestyle play with presence in Jewellery, Watches, Wearables, Dress Material, Fragrances and Handbags which will help sustain premium valuations. TTAN trades at 56.6x FY25E EPS with 17.7% EPS CAGR over FY23-25. We assign DCF based target price of Rs3240 (Rs3242 earlier). Retain Accumulate.