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0Leading Lifestyle Company in India: Incorporated in 1984, Titan is joint venture between Tata Group and Tamil Nadu Industrial Development Corporation (TIDCO). The company has come a long way from one product category to housing over 16 brands across multiple categories in 2000+ retail stores. It has established leading positions in the Jewellery, Watches and EyeCare categories have also diversified into Wearables, Indian Dress Wear and Fragrances & Fashion Accessories.

Jewellery to continue driving growth: Titan’s Jewellery (mainly Tanishq) has been the primary growth driver for the company registering CAGR of 13.8% over FY12-22 and contributing nearly 88% of its overall revenue. Going forward, we expect the growth momentum to strengthen on the back continued formalization of the jeweller industry which benefits players like Titan which has 6% market share. Moreover, Titan’s constant focus on retail expansion, focus on high value studded jewellery, and growing its different brands through a portfolio approach.

Other segments to provide additional levers: Titan’s oldest business of watches & wearables has witnessed healthy growth over the years which we believe would continue on the back of accelerated expansion and constant focus on product innovation. In the Eyecare segment as well, the company has transformed itself from a eyewear brand to eyecare. The opportunity for the EyeCare Division is immense, where ~40% of the Indian population needs vision correction, however, only one third have adopted a solution. This provides a great opportunity to serve many more new customers.

Margin improvement to continue: Titan has seen marked improvement in margins over the years across its business segments led by focus on cost rationalization, increasing revenue from high value items and higher operating leverage.

Outlook: Titan has been the biggest beneficiary of continued formalization of the economy. We believe the trend is likely to continue and Titan would continue to outperform the industry given strong brand presence, wide distribution network and continued focus on product innovation. Moreover, strong financial track record, robust return ratios, strong brand equity makes it one of our preferred picks in the sector. We expect Titan’s Revenue/EBITDA/PAT to grow at 16.2%/26.8%/32% over FY22 -24E. We recommend a Buy on the stock with a target price of Rs. 2,977.

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