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Sharekhan's research report on Titan Company
Titan Company’s (Titan) Q2FY2020 performance was impacted by a sharp increase in gold prices, resulting in subdued demand for the jewellery segment; Consolidated revenue grew by just 2.0% and adjusted PAT declined by 2.7% y-o-y during the quarter. Revenue of the jewellery business declined by ~2%; revenue of the watches business grew by 6% and eyewear revenue witnessed ~28% growth during the quarter. Management has cut its guidance of 12-13% growth in the jewellery business in H2FY2020 (earlier 20%); better demand from the marriage segment (22% of jewellery business) would help double-digit growth.
Outlook
Reduced estimates for FY2020/FY2021 by ~6% each to factor in lower growth in the jewellery business; maintain Buy with an unchanged PT of Rs. 1,445 (valuing at 35x its FY2022E EV/EBIDTA).
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