IGI Logo

Robust sales across divisions led by strong wedding demand and a low base effect

TTAN released its pre-quarterly update for 1QFY23. Here are the key highlights:

Low base and positive consumer sentiments boosted sales

* TTAN witnessed strong demand across its Consumer businesses in 1QFY23.

* Revenue grew 205% YoY due to last year’s low base, a three-year CAGR of 20.5% (over 1QFY20). Business was near normal after two years.

Jewelry: Strong demand during the wedding season and on Akshaya Tritiya

* The Jewelry segment posted a revenue growth of 207% YoY (excluding bullion sales) on a low base, led by strong demand on Akshaya Tritiya in May’22 (after two years).

* Both walk-ins and buyers grew in line with revenue. Ticket size improved marginally YoY.

* The growth in wedding sales was slightly lower YoY, but its share of overall sales remained stable.

*  Sales of plain gold jewelry grew 3x, while studded sales were higher YoY (comparable to pre-COVID levels).

* In 1QFY23, TTAN added 19 new stores (six Tanishq stores, 12 Mia stores in India, and a new Tanishq store in Dubai).

* All International stores witnessed good sales growth, higher walk-ins, conversions, and a better mix, with a higher proportion of studded jewelry.

* Tanishq launched pan-India campaigns for its new collections and regional campaigns in West Bengal and Odisha. It also launched dedicated campaigns for its Mia and Zoya brands.

Watches and Wearables: Strong growth led by a recovery and base effect

* The division saw strong growth (up 158% YoY), with growth across brands and products. All of its key sales channels have continued to do well since FY22.

* The wedding season drove demand for all brands in Apr’22 and May’22.

* Wearables grew 4x on a low base, while maintaining its sales momentum.

* The division added 41 stores (26 Titan World and 15 new Helios).

* Also, 28 stores (including Titan World, Helios, and Fastrack) were renovated to a new format to offer a wider choice of premium brands, thereby enhancing its overall customer experience.

* In 1QFY23, product launches included Raga Ceramics, a new range of Titan Mechanicals and Titan Solar; ‘Stunners 3’, ‘Tick Tock 1.0’, ‘Exuberant’, ‘Uptown Retreat 2.0’, and ‘Topicals 1.0’ under the Fastrack brand; and ‘Utsav’, a wedding collection at value price points under the Sonata brand.

* Launches in the Wearables segment included Titan’s ‘Smart 2’ and ‘Fastrack Reflex Curve’, and ‘Fastrack Reflex Watch’ in Smart Watches.

* It also launched two new campaigns: a) Titan Fashion Hues showcased colorplated watches, and b) a new Titan Raga campaign, with the introduction of Ms. Alia Bhat as the new face of the brand.

Eyewear: Strong growth in 1QFY23

* The division posted a sales growth of 176% YoY, led by Titan Eye Plus and trade and distribution channels.

* It added 56 stores in 1QFY23, taking its total store count to 789.

* Its ‘Make-in-India’ Rx lens and frames production capacity is ramping up well.

Other businesses (Fragrances, Fashion Accessories, and Indian Dress Wear)

* Other business grew 271% YoY in 1QFY23, led by growth in Trade, LFS, and ecommerce channels.

* Fragrances/Fashion Accessories grew 262%/293% YoY.

* Indian Dress Wear grew 7x in 1QFY23 (up 608% YoY).

* Taneria added six stores in 1QFY23, thereby expanding to 10 cities. The brand launched ‘Summer Sorbet’ a unique collection of handcrafted sarees and readyto-wear kurta sets in light weaves.

Key subsidiaries

* CaratLane clocked a revenue growth of 207% YoY. In 1QFY23, the brand focused on engaging and attracting customers during Akshaya Tritiya, which helped achieve its highest sales (20% higher than Dhanteras in CY21).

* Its ‘First Salary’ gifting campaign for new occasions was well received, with #MyFirstSalary trending second nationally, reaching over 190m users and garnering 2.5m views.

Other points

* Titan Engineering & Automation (TEAL) clocked a revenue growth of 35% YoY, with equal contribution from Automation Solutions (AS) and the Aerospace and Defense (AD) businesses.

* Overall growth in order inflows was in the mid-teens. Order inflows in the AS business fell to low double-digits YoY, whereas it grew over 2x in the AD business.

Valuation and view

TTAN remains our top pick in the largecap Consumption space in India, with strong earnings growth visibility and compounding by ~20% for an elongated period of time. In the Jewelry industry, which is organizing at a rapid space, TTAN is clearly at the vanguard among organized players in leading this growth. Its runway for growth is long, with a market share of ~6%. Unlike other high-growth categories, the competitive intensity from organized and unorganized peers in Jewelry is considerably weaker. The structural investment case for TTAN is intact. We maintain our Buy rating with a TP of INR2,900 per share, premised on 75x Mar’24E EPS.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer