Credit Suisse says Titan to 'outperform', Rs 341 target

Moneycontrol  Bureau

Credit Suisse on Tuesday initiated coverage of Titan Industries with an "outperform" rating and a target of Rs 341, saying it has "compelling structural growth story" and sees the watch to jewellery and eyewear maker report 18-20 percent revenue growth and expanding margins over the next two years. "Demand for jewellery was very weak in the last four quarters with 20-40 percent year-on-year volume decline. However, we are clearly seeing signs of demand bottoming out. We do not expect a sharp recovery but a gradual return of consumer buying. With Titan in the process of doubling its retail space over FY11-13, we expect strong 15-20% volume growth with a lag of 12-18 months," analysts Arnab Mitra and Akshay Saxena said. The growth will be driven by the jewellery division which now accounts for 80% of Titan's earnings before interest, taxes (EBIT), the analysts said, adding they see the contribution of the jewellery business growing further. "Out of India's total jewellery market estimated at Rs 2,000 billion (Rs 2 lakh crore) in FY12, Titan's branded jewellery sales were Rs 70 billion (Rs 7,000 crore) -- less than 4 percent of the total market. Total organised branded jewellery is estimated to be less than 10 percent of the overall market. However, there is a clear shift taking place from unorganised standalone jewellers to branded jewellery chains," Mitra and Saxena said. Jewellery apart, Titan also has a huge opportunity to grow in the watches segment, where it has over 30 percent volume market share and 65 percent value market share in the organised segment, as watch penetration is just at 27 percent, the Credit Suisse analysts said. Titan shares hit a 52-week high of Rs 306 on NSE on Tuesday. The stock closed at Rs 303.25, up 1.5 percent.