Hold Titan Company: target of Rs 3300: ICICI Securities

ICICI Securities's research report on Titan Company

Titan's domestic jewellery business had an abnormally weak quarter (LFL and revenue growth of 3% and 8% YoY respectively) due to external headwinds of steep gold price inflation, lower number of wedding days, election-led restrictions in its core markets while it had a significantly better performance in south (+16% YoY). Customs duty cut is likely to have long-term benefits of accelerating industry formalisation. That said, the current phase appears to have hit an airpocket [formalisation gains accruing more to competition, necessity to choose revenue OR margins, new city addition driven expansion [opportunity] in India is largely done with, for now etc.]. Portfolio play (Mia (<5% contribution to domestic jewellery) and Caratlane) in jewellery shall accelerate. Positively, it maintains EBITDA margin guidance of 11.5-12.5%. Maintain HOLD.

Outlook

We largely maintain our FY25E-26E earnings estimates; modelling revenue / EBITDA / PAT CAGR of 18 / 18 / 18 (%) over FY24-26E. Maintain HOLD with a DCF-based revised target price of INR 3,300 (vs INR 3,200 previously). Key upside risk is gold price volatility leading to lower competitive activity. Key downside risk is worsening of macro environment leading to demand slowdown.