Add Titan Company Ltd for the Target Rs 4,750 by Emkay Global Financial Services Ltd
TTAN held its biennial analyst meet, where it provided an encouraging mediumterm outlook of doubling its revenue/EBIT over FY26-30 (~20% CAGR). However, the near-term outlook has a cloud of uncertainty given gold volatility, regulatory interventions, and likely inflation at the consumer level. While the overall outlook is in-line, the jewelry (TMZ) margin outlook is a tad weaker (vs expectations), as TTAN has guided for further margin moderation of ~100bps over FY26-30 (after a 130bps moderation over FY23-26), due to elevated gold price and higher mix of low-margin coin sales. The miss in jewelry business is, however, expected to be offset by a better outlook on Watches/Eyewear/TEAL and strong margin turnaround in the Emerging/International segments. Given the uncertain environment, we cut our multiple by ~10% which leads to an ~11% cut in our TP, from Rs5,350 to Rs4,750 (55x FY28E EPS). However, we maintain ADD, as TTAN has best-in-class execution credentials – a key testament to this is TTAN meeting its FY22 outlook of 2.5x scale-up in FY26 itself vs target of FY27, despite high macro uncertainties
Expects robust topline trends to continue across business segments
TTAN expects ~20% topline CAGR for the domestic Jewelry business (TMZ) over FY26- 30, helped by an underlying expectation of ~10% industry CAGR and continued marketshare gain in FY26-30 (~11.0% by FY30 vs ~8.5% in FY26; TTAN estimates), of ~250bps in total. The pace of network expansion and enhancement of existing stores is expected to continue, as TTAN targets ~1,400 combined stores for TMZ by FY30 (vs 853 stores at FY26-end; ~13% CAGR). Among formats, TTAN expects to revamp/increase the retail space in ~60 Tanishq stores and continue adding ~40/60 new Tanishq/Mia stores annually. CaratLane revenue is expected to more than double over FY26-30 (~23% CAGR), aided by its omni-channel model and increasing brand traction via its marketing campaigns. For Damas, TTAN expects 2x revenue growth by CY29, led by network expansion in KSA region and better store productivity in UAE. TTAN aspires to see ~20% CAGR in its watch business over FY26-30, with focus on defending and dominating the
TMZ business margin decline to be offset by margin gains across other verticals
TTAN expects a lower, ~16% EBIT CAGR (vs 20% revenue CAGR) for its TMZ business due to weaker product mix (elevated gold price/higher coin mix). For CaratLane, it still sees some scope for margin expansion and expects reaching a low double-digit EBIT margin. In the watch segment, it expects a high ~22% EBIT CAGR (vs 20% revenue CAGR), helped by premiumization. The Eyewear business margin expansion is expected to be on the back of better store productivity, while emerging segments and International businesses are expected to see a significant profitability turnaround, with target of delivering mid-to-high single-digit margin by FY30. Overall, TTAN expects ~2x revenue and EBIT growth, as margin loss in the TMZ segment is expected to be offset by gains across other business segments.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354
