Prabhudas Lilladher's research report on Titan Company
We conducted channel check of eyecare players to evaluate key success factors such as a) price b) in-store experience, c) after-sales support and d) store presence. We conclude that Titan Eye Plus (TEP) clearly stands out with high customer ratings (4.9/5.0) and superior customer value. We believe that TEP has huge scope of growth, as only 33% of people in need of eyecare (600mn) are using specs as of now. TTAN has cracked the Eyecare model with a 5 pronged strategy which includes a) retail expansion (1000 stores by FY24), b) in-house manufacturing of both frames & lenses, c) superior customer experience d) product innovation (Titan EyeX, Titan Ultima & Clear SightZ) and e) cutting edge communication. We expect eyecare business to achieve sales of Rs10.5 with EBITDA of Rs2.4bn by FY25. Based on Lenskart valuation of USD4.5bn, Titan Eye+ could be worth Rs126/share (Rs120bn) in valuation. While we remain confident of steady growth in Jewellery and Watches, we believe emerging businesses of Titan Eye+, Wearables, Caratlane and Taneira will provide an icing on the cake.
Outlook
TTAN currently trades at 58.0x FY25E EPS with 19.9% EPS CAGR over FY23-25. We remain structurally positive but cut our rating from BUY to Accumulate post recent run up in stock price.
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