Edelweiss Securities's research report on Titan Company
Our recent interaction with Titan Company’s (Titan) management and visit to Taneira store (saree venture) in Bengaluru reinforce our confidence in the company’s bright prospects. Management perceives GST as a positive development and a potent catalyst for compliant players like Tanishq to gain market share. Growth remains key agenda— targeting 2.5x jump in jewellery business by FY22, ~20% CAGR from current INR102bn sales. Moreover, entry in the saree business via Taneira with 2 pilot stores in Bengaluru has exceeded Titan’s expectations; planning to test waters in Mumbai and Delhi as well. In Q1FY18, performance across businesses was good, especially jewellery (50% growth over Akshay Tritiya in FY17). Maintain ‘BUY’.
Outlook
We envisage Titan to be key beneficiary of share gains led by GST, while entry in new segments and retail expansion will boost growth. Moreover, rising share of studded jewellery and cost optimisation will aid margin. The stock is currently trading at 37.5x FY19E EPS. We recommend ‘BUY‘ and rate it ‘SO’ with target price of INR600.
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