Buy Titan Company; target of Rs 2770: Emkay Global Financial
Emkay Global Financial is bullish on Titan Company has recommended buy rating on the stock with a target price of Rs 2770 in its research report dated October 28, 2021.
October 28, 2021 / 04:26 PM IST
Emkay Global Financial's report on Titan Company
TTAN's operating performance was 13-17% ahead of our/street estimates as better margins boosted EBITDA growth by 3x on low comparables (2yr CAGR 36%). Despite lower studded mix, Jewelry EBIT margins improved on operating leverage. Favorable product/channel mix led to a strong improvement in eyewear EBIT margins to 23%. Jewelry sales grew 77% with a 2-year CAGR of ~32%. Strong growth was driven by store expansions, pent-up demand and market share gains. Management did not quantify festive period growth but indicated growth trends to be healthy. Expansion picked up pace with 10 store additions after a lockdown-hit Q1. TTAN expects to add 35-40 Tanishq stores annually. It also indicated an aggressive target of 250-300 store additions for eyewear and higher investments on upgradation of WOT stores.
Festive/wedding season can further boost revenues and offer more upsides, in our view. We raise earnings by 3-6%. Given a solid earnings outlook, we retain Buy and raise the TP to Rs2,770 (from 2,530) based on 65x Dec'23E EPS (vs Sep-23 EPS earlier).
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