Hold Titan Company; target of Rs 3100: ICICI Securities

ICICI Securities research report on Titan Company

Titan's domestic jewellery business revenue growth had a strong revival (~25% YoY; LFL: 15% YoY) driven by improved industry demand conditions (though likely to underperform peers) for gold jewellery due to customs duty cut while highervalue studded segment demand was under pressure due to global price uncertainty, leading to ~300bps (~30%) reduction in studded share. This led to a material decline of ~270bps in normalised jewellery EBIT margin with management revising its guidance downwards to 11-11.5% (vs 11.5-12.5% earlier). Further, current phase of formalisation gains accruing more to competition (availability of growth capital) will likely continue to keep a check on revenue growth performance. Global price uncertainty in high-value studded segment is another headwind. We like management’s preference of growth over margins in the near term. That said, both growth and margin are important for its valuations. HOLD.

Outlook

We have cut our earnings estimates by ~23%/~10% for FY25E/26E largely due to lower EBIT margin expectations in jewellery segment; modelling revenue / EBITDA / PAT CAGR of 18 / 17 / 13 (%) over FY24-26E. Maintain HOLD with a DCF-based revised target price of INR 3,100 (vs INR 3,500 previously).

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