Buy Titan Company Ltd For Target Rs.3,725 By JM Financial Services
Titan has entered into an agreement to acquire 67% stake in Damas LLC, which will provide the former access to the Damas Jewellery business (ex-Graff Monobrand franchise business). Titan has acquired Damas at an EV of AED 1,038mn (excluding GML), translating into 0.7x EV/sales CY24. The acquisition has multiple positives as it (i) helps Titan to become 3rd/4 th largest player in the 4th largest jewellery market in the world, (ii) gives it access to 146 premium locations in UAE, and (iii) offers scope of improvement in profitability in the GCC region led by several synergy benefits in terms of talent, retail networks and supply chain. We are not building in this acquisition into our estimates as we await granular details related to it, like PL/BS and CF. We have a BUY rating on the stock with a TP of INR 3,725 (57x Mar’27 EPS).
* Acquisition of Damas Jewellery business: Titan, through its wholly owned subsidiary Titan holdings International FZCO, has entered into an agreement to acquire 67% stake in Damas LLC (UAE) – which is the holding company for the Damas Jewellery business in GCC countries – from Mannai Corporation (ex-Graff Monobrand franchise business). The current Graff Monobrand franchisee business of Damas LLC will be discontinued before completion of the acquisition. Titan has agreed to acquire Damas at an EV of AED 1,038mn through cash consideration. It will also have the right to acquire the remaining 33% stake from Mannai after 31st Dec’29, subject to certain conditions. The deal is likely to be financed through a combination of debt and cash balances, and internal accruals; it implies a multiple of 0.7x EV/sales CY24.
* About the acquired company: Damas Jewellery, founded in 1907, is headquartered in Dubai and is Middle East’s premier jewellery retailer, it has a rich legacy of over a century marked by unparalleled craftsmanship and innovation. It operates 146 stores across the 6 GCC countries. The brand seamlessly blends intricate designs inspired by the regional heritage such as Arabic architecture and the Arabic alphabet, with contemporary trends to cater to a diverse clientele of affluent customers. Revenue for the company has grown at 13% CAGR over CY22-24. Revenue grew ~10% YoY to AED 1.5bn while PAT declined 64% YoY to AED 8mn in CY24.
* Purpose of acquisition: The acquisition is strategically significant for Titan's jewellery business as it will facilitate expansion across the 6 GCC countries. CK Venkataraman, MD of Titan, highlighted that the Damas acquisition will help Tanishq step out from its diaspora focus to other nationalities and ethnicities. The acquisition will not only create a significant new global opportunity for Titan but will also enhance Titan’s overall position in the jewellery market in the GCC countries considering it provides access to 146 premium locations in the UAE market and will make Titan (incl Damas) the 3rd or 4th largest player in the market. It will also bring in multiple synergy benefits in talent, retail networks and supply chain, and employee cost.
Note – Currently, Damas LLC is the holding company for the entire jewellery business of Mannai Corporation QPSC. Post restructuring, Signature Jewellery Holding Limited will become the holding company for Damas, and all the entities under Damas LLC (UAE) will become step-down subsidiaries of Signature Jewellery Holding Limited.
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