Target: ₹2,832

CMP: ₹2,538.9

We are changing FY22/23/24 EPS by 5.3 per cent/0.1 per cent/-2.4 per cent of Titan Company and reiterate Buy with DCF based target price of ₹2,832 (earlier ₹2,907).

Titan reported one of the best quarters on the back of: strong jewellery demand driven by festive purchases (buyer/ volume growth of 32 per cent/ 47 per cent); Margin expansion in jewellery led by 100bps gains in jewellery margins due to higher diamond prices and lower GHS sales and operating leverage; Accelerated store openings in Eyewear (net 53 added); and sustained momentum in watches and other categories.

Although Titan reported 14.6 per cent jewellery margins and despite a strong demand environment at least till April, we believe sustainable margins to be 12-13 per cent.

We believe Titan is well placed to capitalise on long term growth opportunities led by: jewellery share gains due to network expansion, regional thrust and hallmarking benefit; Omni-channel strategy across; jewellery, watches and eyewear; new growth drivers like Caratlane, TitanEye+, Taneira; and entry into high growth segments like smart watches, over the head headphones and Truly Wireless earphones.

We estimate 23.5 per cent 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.