TTAN reported muted 1Q as national elections, lower number of wedding days, extreme heat wave & rise in gold price (20% YoY) impacted sales. As against our expectations of sharp upsurge in Jewellery demand in 2H, cut in custom duty has resulted in sharp spike in demand recently. We believe higher custom duties will render illegal imports unviable, which will benefit organized players like TTAN significantly. We expect growth rates to improve in coming quarters led by improved volumes in jewellery, traction and benefits of cost control in eyewear and watches. Caratlane should also see improved profitability with focus on throughput and profitability with calibrated store expansion. Although FY25 EPS growth is likely to be muted, we expect strong growth in FY26 (starting from 2H25) which will get a boost from gradual reduction in interest burden (Rs32bn borrowed to purchase stake in Caratlane).
OutlookTTAN remains a formidable play on emerging lifestyle segments. TTAN trades at 59.6x June26E standalone EPS with 19.5% EPS CAGR over FY24-26. We retain accumulate with DCF based target price of Rs3958 (Rs3545 earlier).
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