Prabhudas Lilladher's research report on Titan Company
TTAN reported a robust 1Q led by 400bps positive impact of revaluation in watch business EBIT margin and 50bps positive impact of MTM gain from hedging in jewellery business. However, we remain cautious in near term given 1) rising inventory costs due to higher gold prices (Rs75bn increase in FY25) will result in higher interest burden in coming quarters as store openings accelerate in an environment of rising gold prices. 2) Demand outlook remains hazy as gold prices remain at all time high levels and 3) recent tariff led geopolitical uncertainty can add to demand pressures. TTAN’s long term outlook remains positive given 1) sustained focus on improving product mix to enable maintain current margin levels and strong new buyer growth 2) change in focus on light weight jewellery (9k and 14k) to cater to sub Rs50,000 consumer which is likely to drive value growth and 3) Watch business to continue see strong momentum in medium to long term led by unique designs and innovations.
Outlook
We estimate 27.5% PAT CAGR over FY25-27. We assign an SOTP based target price of Rs3901 (Rs3830 earlier). Retain Buy.
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