Buy Titan Company; target of Rs 3850: Motilal Oswal

Motilal Oswal's research report on Titan Company

Titan Company (TTAN) posted consolidated sales growth of 16% YoY in 2QFY25 (in line). The pressure on EBITDA margins led to a 7% miss on EBITDA (after adjusting customs duty). Higher interest costs (+71% YoY) and depreciation (+19%) led to only 2% YoY growth in adjusted PAT. Jewelry sales growth (standalone, excluding bullion) was strong at 26% YoY (+9% in 1QFY25) due to strong demand recovery after customs duty reduction. Buyer growth was 12% YoY. Studded growth was 12% YoY, and the ratio was 30% (300bp decline YoY). Net store additions were 35 in 2Q, taking the total store count to 1,009. Standalone LFL growth was 15%. Caratlane’s growth was strong 28% in 2QFY25.

Outlook

We model a CAGR of 17%/17%/18% in revenue/EBITDA/PAT during FY24-27E. TTAN’s valuation is rich, but it offers a long runway for growth with a superior execution track record. Reiterate BUY with a TP of INR3,850 (based on 60x Sep’26E EPS).