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Centrum Broking
Titan Co (Buy)
Target: ₹2,778
CMP: ₹2,612.5
Titan Company’s Q3 business update points to a strong demand momentum across its various divisions, clocking overall 36 per cent growth y-o-y, led by strong festive season in October/ November. More importantly, we believe it would have gained market share from regional players.
The jewellery division reported strong 37 per cent growth (ex-bullion sales), while watches and wearables saw 28 per cent growth. The eyewear/other businesses saw 27 per cent/44 per cent growth and Caratlane (sub) witnessed 64 per cent growth. The company said that it has added nearly 89 stores in Q3 across jewellery/ watches and eyewear verticals. As argued earlier we maintain a positive stance and expect strong demand condition across divisions to drive revenues and margin expansion in following quarters also. We expect continued strong revenue pick-up in the recently concluded festive season being strong due to deferred weddings from last year. Further, lower gold prices could induce advance purchases for future. Nonetheless, mandatory hallmarking is taking speed and will have positive impact, benefiting organised players like Titan.
In addition, on weak base in the base quarter we expect strong demand condition for Watches and Eyewear to continue, given consumer mobility. We expect strong demand condition across divisions to drive revenues and margin expansion.
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