Accumulate Titan Industries; target Rs 320: P Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Titan CompanyWe are cutting FY16 and FY17 EPS for TTAN by 13.4% and 16.2% and target price to Rs320. TTAN reported 14.8% decline in Q1FY16 PAT as poor volumes across jewellery and watches and higher spends on media campaigns and dealer conference impacted margins. TTAN continues to suffer from aftermath of regulatory changes in the jewellery business and poor sentiment impacting demand across segments.

Jewellery business faces near‐term pressures, given consumer reluctance to buy gold jewellery in a weak pricing environment, stiff competition and impact of GHS (Golden Harvest Scheme) closure in Q2FY16. TTAN is aiming to increase jewellery growth by 1) 3% reduction in making charges 2) new GHS scheme 3) tie‐up with banks for consumer finance scheme and 4) increased focus on premium jewellery. We believe that the benefit of above measures will be reflected post Q2FY16 only.

Watch business volumes are under pressure due to poor consumer sentiment; TTAN is undertaking premiumisation across brands including Sonata and Fastrack to increase profitability in this segment. However, we remain sceptical on near‐term recovery, given that sales growth in WOT, Helios, Fastrack and LFS has been lower than overall sales growth of the watch business. We believe watch business has also been impacted by rising discounts in online retail, which is likely to sustain in the medium term.

TTAN is looking at aggressive expansion in Rs3bn Eyewear business, given huge growth potential and low penetration. The company expects EBIT margins to increase from current level of 7.5% to 15% over the coming 2/3 years. TTAN has initiated steps to improve its brand positioning and increase profit growth, the impact will start getting reflected from H2FY16 only. We estimate 5% PAT decline in FY16 and 23.4% PAT growth in FY17; volatility in gold prices and online retail remains a key risk to our estimates. We recommend “Accumulating” TTAN at lower levels for long‐term gains.

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