Accumulate Titan Company; target of Rs 3767: Prabhudas Lilladher

Prabhudas Lilladher's research report on Titan Company

We cut FY25 EPS estimate by 5% following soft demand and broad based margin pressure across segments amidst higher competition. TTAN 4Q24 PAT were miss on estimates led by lower than expected margins, muted demand in Q4 amid high gold prices & higher completion from smaller and unorganized players (more consumer offers). Watch margins suffered due to higher investments behind marketing & increased overhead costs. While 1Q25 Jewelry demand outlook remain tepid given rising gold prices (Gold prices increased by 9.4% in Apr’24 & 19% YoY), lower number of wedding days & rising competition. Sales growth is likely to suffer in Watches/ Eyewear due to tepid demand and competitive intensity. We believe margins are near bottom and expect recovery in 2H25 led by improved traction and benefits of cost control in eyewear and watches and low base in Jewelry. Caratlane should also see improved profitability with focus on throughput and profitability with calibrated store expansion.

Outlook

Although TTAN remains a formidable play on emerging lifestyle segments, we expect back ended returns with muted growth expectations in 1H25. TTAN trades at 56.8x FY26E standalone EPS with 25.5% EPS CAGR over FY24-26. We assign DCF based target price of Rs3767 (Rs3817 earlier). Retain Accumulate.