Buy Titan Company; target of Rs 4250: Motilal Oswal

Motilal Oswal's research report on Titan Company

In FY25, Titan Company (TTAN) continued to post strong double-digit growth (18% YoY) despite high gold inflation and intensified competition. The company continued to invest in supply chains, digital data, omnichannel capabilities, retail networks, and international markets. However, it witnessed margin pressure across its verticals. Jewelry business margin (standalone, ex-bullion) contracted 90bp to 11.4% (down 230bp from FY23). Volatile and elevated gold rates amid growing competition affected TTAN’s jewelry margin as well as demand sentiments. The company invested more in consumer promotions to drive growth and acquire customers. Jewelry revenue/EBIT (standalone, ex-bullion) grew 21%/12% YoY. The Watches & Wearables division clocked 17%/39% revenue/EBIT growth backed by robust double-digit growth across brands. The EyeCare division witnessed 10%/flat YoY revenue/EBIT growth, with EBIT margin contracting 100bp to 10% due to high overhead expenses and operating deleverage. Other businesses saw healthy revenue growth. TTAN clocked an impressive CAGR of 20%/18% in sales/PAT over FY19-25.

Outlook

We model a 16%/18%/22% revenue/EBITDA/PAT CAGR during FY25-27E. TTAN’s valuation is rich, but it offers a long runway for growth with a superior execution track record. Reiterate BUY with a TP of INR4,250 (based on 65x FY27E EPS).

For all recommendations report, click here