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Buy Titan Company; target of Rs 1105: Motilal Oswal

December 06
07:25 2018

Motilal Oswal’s research report on Titan Company

We recently met Titan Company’s (TTAN) management to take a stock of the company’s underlying story and the efforts that it is undertaking to grow amid a favorable operating environment for organized players. Key takeways. In an encouraging sign, wedding season demand is scaling up well for TTAN. This should uplift management confidence as it had guided for healthy growth (25-30%) for 3QFY19 but refrained from commenting on the fourth quarter performance. In our view, if consumers continue flocking to its stores in the wedding season, Jewelry sales growth of 25% for the full year is achievable (note that TTAN had guided for Jewelry sales growth of 25% at the start of the year but lowered it to ~20% later). SSSG is likely to contribute 75-80% of Jewelry sales growth, which is even higher than the impressive 60% that it was reporting earlier. This, in turn, would have extremely positive implications on Jewelry EBIT margin.

Outlook

We maintain our Buy rating on the stock with a target price of INR1,105, based on 47x Dec’20 EPS (~10% premium to three-year average P/E).

For all recommendations report, click here

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