Buy Titan Company; target of Rs 4,100: Motilal Oswal

Motilal Oswal's research report on Titan Company

Titan Company (TTAN) posted consolidated sales growth of 21% YoY in 4QFY24, marginally better than our estimate. However, EBIT margins across segments were weak, leading to an overall 8% miss on EBITDA in 4QFY24. Jewelry sales (ex-bullion) grew 22% YoY, with double-digit growth in the number of buyers. The studded ratio expanded to 33% (same YoY). Net store additions were slow, at 39 in 4Q, bringing the total to 937 stores (174 store additions in FY24). LFL growth for Tanishq was healthy at 14% (15% FY24), while Caratlane’s growth was slower at 3% in 4QFY24 (6% FY24).

Outlook

The near-term growth outlook appears subdued due to high gold inflation affecting demand sentiments, which is a typical trend during inflationary periods. However, despite the near-term jitteriness, the company remains aggressive in its growth outlook, driven by new store additions, attractive designs, and market share gains, et al. TTAN also maintains a Jewelry EBIT margin of 12-13% for FY25. We will monitor the near-term consumption trend. Reiterate BUY with a TP of INR4,100 (premised on 65x Mar’26E EPS). We continue to maintain TTAN as our top consumer discretionary play in India.