Buy Titan Company; target of Rs 3833: Prabhudas Lilladher

Prabhudas Lilladher's research report on Titan Company

Tax relief in budget should increase discretionary spending, TTAN likely to see higher sales growth across segments in coming quarters ▪ 4Q jewellery demand is strong, however sharp increase in gold prices and rise in gold on lease rates pose a challenge. Medium term EBIT margin guidance maintained at 11-11.5% TTAN reported a robust 3Q led by 1) demand led by festive & wedding season 2) Strong demand in Analog watches and 3) healthy response in sub 1 lakh jewellery (Caratlane and Mia). TTAN’s strategy of creating multiple growth levers is intact as 1) jewellery sub brands like Mia and Caratlane are creating a strong niche. 2) Premiumization and focus on analog watches and 3) increased advertising, consumer activations and exchange schemes in Jewellery.

Outlook

We are raising FY25 EPS by 2.5% even though we cut FY26/27 EPS by 1.2/3.2% respectively mainly to factor in higher rates for gold on lease and capping Jewellery margins for FY26/27 at 11.3% (11.5% earlier). We estimate a CAGR of 16.8% in Sales and 21% in EPS over FY25-27. We assign SOTP based target price of Rs3833 (Rs3882 earlier). Retain Buy.