Buy Titan Company; target of Rs 1300: Motilal Oswal

Motilal Oswal 's research report on Titan Company

TTAN has released its pre-quarterly update for 4QFY19 (and also FY19). Key highlights: The company achieved overall sales growth of ~21% in FY19. Jewelry sales grew by ~22% after increasing by 25% in FY18, thereby exceeding the originally envisaged 20% five-year sales CAGR target for the second consecutive year . Moreover, management’s confidence on further 20% overall sales growth in FY20 – despite a muted economic outlook – is heartening. Watches division reportedly continued its healthy growth momentum for the past few quarters, ending the year with ~16% growth (implying 14% growth in 4QFY19). Eyewear achieved revenue growth of ~23% for the full year (implying 18% growth in 4QFY19). There is no material change to our EPS estimates. We maintain our Buy rating with a target price of INR1,300, valued at 51x Mar’21 EPS, ~15% premium to three-year average multiple because of its strong earnings growth prospects (~26% EPS CAGR over FY19-21E).

Outlook

We maintain our Buy rating with a target price of INR1,300 (51x Mar’21E EPS, ~15% premium to three-year average P/E).