PL Stock Update - Titan 1Q24 Update: Jewelry business shines despite gold price volatility

PL Stock Update – Titan 1Q24 Update: Jewelry business shines despite gold price volatility – Amnish Aggarwal – Head of Research, Prabhudas Lilladher Pvt Ltd

Jewelry

♦ Revenues grew by 21% YoY (ex-bullion sales), with buyer growth higher than average ticket size.

♦ Akshaya Tritiya sales in April and wedding purchases in June were robust despite gold prices volatility throughout the quarter.

♦New store additions, golden harvest and exchange programs continued to do well during the quarter.

♦ Tanishq added a new store in Sharjah expanding its international presence to 7 stores in GCC region and 1 store in USA.

♦ Added 18 stores (net) during 1Q24, taking the store count to 559.

Watches & Wearables

♦ Revenues grew by 13% YoY led by 8% growth in analogue watches and 84% growth in the wearables segment.

♦ Helios, Large Format Stores (LFS) and E-commerce grew ahead of other channels.

♦ Titan and international brands saw strong buying momentum, clocking strong double digit growth. Consumer preferences for premium brands resulted in higher ASPs for watches.

♦ Added 26 stores (net) during 1Q24, taking the store count to 1031.

Eyecare

♦ Revenues grew by 10% YoY with Trade & Distribution channel growing ahead of Titan Eye+.

♦ Added 7 stores (net) during 1Q24, taking the store count to 908.

Other Businesses – Fragrance & Fashion Accessories (F&FA) and Indian Dress Wear (Taneira)

♦ Fragrances/Fashion Accessories/Indian Dress Wear grew at 9%/13%/81% YoY.

♦ Taneira entered three new cities of Vijayawada, Agra and Berhampur.

♦ Taneira added 6 stores (net) during 1Q24, taking the store count to 47.

CaratLane

♦ Business grew 32% YoY driven by healthy contributions from multiple avenues such as Akshaya Tritiya sales.

♦ Added 11 stores (net) during 1Q24, taking the store count to 233.

PL View: TTAN’s 1Q standalone revenue growth of 20% YoY was led by double-digit growth across segments. The jewelry performance was encouraging at a time when there was a significant rise in gold prices. Watches appears to have slowed with 2% QoQ increase in sales while wearables continue to show robust growth. Eyecare growth has recovered well with 22% QoQ helped by increased promotional activities. New engines – Taneira/Caratlane continue to record growth ahead of company average. We believe that 1) robust jewelry demand, improved mix and hallmarking benefits 2) expansion of 100 stores in eyewear in FY24 and 3) acceleration in store openings in watches and 4) scale up in emerging businesses like Taneira and wearables will be major growth drivers for TTAN.

At CMP of Rs3106, stock is trading at 58.4x on FY25 EPS. We have a BUY rating on the stock with target price of Rs3242.