Buy Titan Company; target of Rs 1300: Emkay Global Financial
Emkay Global Financial is bullish on Titan Company has recommended buy rating on the stock with a target price of Rs 1300 in its research report dated October 28, 2020.
November 05, 2020 / 12:10 PM IST
Emkay Global Financial's report on Titan Company
Excluding the hedging impact of Rs4.8bn, comparable revenue fell 14% to Rs38.3bn. Comparable Jewelry revenue was down ~16% whereas watches/eyewear declined ~44%/39%. Reported revenue declined 3%. EBITDA declined 36% (excl one-offs) and was 20% below estimates. Adjusted gross margins fell sharply due to low studded mix (26% vs. 38% YoY) and lower contribution from watches/eyewear. Cost saving was strong, restricting comparable EBITDA margin decline to ~200bps. Further recovery in sales and strong cost savings program can drive sharp margin gains in the coming quarters. Titan alluded to market share gains by highlighting relatively faster recovery than peers. Festive demand has been healthy so far (high single-digit growth) and can further improve. Wedding demand was strong and we expect a boost from the upcoming wedding season.
Faster-than-expected recovery in jewelry, market share gains and impressive cost saving offer a better earnings growth outlook over FY22-23E. We raise estimates by 4-8%. Maintain Buy with a revised TP of Rs1,300 (from Rs1215).
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