Titan Company Limited’s (Titan) jewellery business sales recovered to 80% in June on like-to-like basis. Increased demand from the wedding segment, higher demand for Gold Harvest Scheme, and improved sales of gold, considering it as the safest bet of investment, will enhance performance in the coming quarters. Other businesses such as watches and eyewear will take some time for recovery as out-of-home consumption is on backseat in the near term. Overall, management expects full recovery by Q4FY2021 (jewellery business might see full recovery from Q3FY2021). Titan's OPM was affected by unfavourable mix, ineffective hedges, and lower operating leverage. With recovery in performance in the subsequent quarters, OPM will see sequential improvement. Gain in market share, people shifting to trusted brands, and relatively stable balance sheet make Titan a better play in the retail space.
OutlookWe maintain our Buy recommendation on the stock with a revised PT of Rs. 1,200.
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