Prabhudas Lilladher has given Buy recommendation for Titan Company with a target price of Rs. 2701 in its research report issued on May 03, 2022
Prabhudas Lilladher’s research report on Titan Company
We cut FY23/24 EPS estimates by 5.9%/4% and reiterate BUY with DCF based target price of Rs2,701 (earlier Rs2,754). TTAN reported a relatively weaker set of numbers on the back of 1) volatility in gold prices (wedding category saw degrowth 9% YoY) 2) store lockdowns in January due to Omicron scare. 3) weak growth across categories as Rs1.3bn inventory gains in diamond were more than offset by Rs510mn of VRS and Rs720mn of ex gratia to employees. We believe TTAN is well placed to capitalize on long term growth opportunities led by 1) jewellery share gains due to network expansion, regional thrust and hallmarking benefits 2) Omni-channel strategy across jewellery, watches and eyewear 3) new growth drivers like Caratlane, Titan Eye+, Taneira and 4) entry into high growth segments like wearables such as smart watches, over the head headphones and Truly Wireless earphones. We estimate 25.3% PAT CAGR over FY22-24 and remain positive given structural story on account of market share gains, strong balance sheet, franchisee based model and strong brand.
However, valuations at 64.3x FY24 leave little room for re-rating. Reiterate BUY with DCF based TP of Rs 2,701 (Rs 2,754 earlier), with moderate returns in near term.