Accumulate Titan Company; target of Rs 3671: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Titan Company with a target price of Rs 3671 in its research report dated January 01, 2024.

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February 06, 2024 / 15:49 IST

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Prabhudas Lilladher's research report on Titan Company

We cut FY24/25/26 EPS by 2/1.6/1.4% following margin pressure across segments indicating some softness in demand and higher competition. TTAN 3Q24 PAT missed on estimates, led by 200bps lower share of studded jewellery, muted demand in Q3 amid high gold prices & higher completion from smaller and unorganized players (more consumer offers). Watch margins suffered due to higher investments behind wearables/ Fastrack and higher sales of margin dilutive online channel. 4Q Jewellery demand outlook is positive (January month sales) given marriage season and stabilization in Gold prices. We expect improvement in watch margins, however Eye wear seems to be having poor visibility due to heightened competition. TTAN continues to imbibe multiple growth engines led by 1) Jewellery network expansion, regional thrust and sub brands like Mia, Zoya and Caratlane 2) Omni-channel strategy across jewellery, watches and eyewear 3) rising presence in higher growth segments of wearables, dress material, handbags and fashion accessories.

Outlook

TTAN is a formidable play on emerging lifestyle segments which will gain from rising discretionary spends. TTAN trades at 58.4x FY26E EPS with 23% EPS CAGR over FY24-26. We assign DCF based target price of Rs3627 (Rs3640 earlier). We recommend Accumulate TTAN on declines for LT gains.

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