Buy Titan Industries; target of Rs 250: Prabhudas Lilladher

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Buy Titan Industries; target of Rs 250: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Titan Industries and has recommended buy rating on the stock with a target of Rs 250 in its August 22, 2011 research report.

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Prabhudas Lilladher is bullish on Titan Industries and has recommended buy rating on the stock with a target of Rs 250 in its August 22, 2011 research report.

"Titan Industries, while rate of growth has moderated, Titan hasn't experienced any impact of downturn as yet in any of its key business divisions. Neither has it experienced any impact on account of government regulation regarding PAN card (for any purchase of above Rs 5Lakh in Jewellery, PAN number is mandatory) as its ticket size is far lower at Rs30-50k. It will continue to focus on Large format stores (offers higher sales/Sqft, better inventory turns and <24 months break-even) and strengthen its wedding offerings. It expects grammage increase to offset decline in Gold price, if any. Titan can use part of cash generated to buy Tanishq properties in future, in order to de-risk the model."

"In Watches, Titan targets Rs35bn turnover by FY15e (Rs12.5bn in FY11) to be driven by network expansion, introduction of new designs as well as shift towards branded segment. Titan aspires to expand the category in Eye-wear and Accessories (currently 177 stores) segment by getting into new sub-categories. It's targeting FY13e beak-even and believes potential margins can be higher than Watches. It intends to enter new life-style categories in medium to long term."

"We continue to like Titan's dominant presence in its key business segments and its capital efficient growth model. We expect Titan to post ~29% EPS cagr for FY11-13e. Maintain 'BUY' with TP of Rs 250. Severe fall in Gold prices and significant macro slowdown impacting consumer sentiment constitutes key risks," says Prabhudas Lilladher research report.  

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To read the full report click on the attachment