Company Update : Buy Titan Company Ltd by JM Financial Services Ltd
* Jewelry: Segment domestic revenue grew ~19% YoY; however Tanishq Mia and Zoya registered 18% growth (ex- bullion). This is substantially higher vs our initial estimates of ~12% jewellery growth. Ticket size increased substantially led by surging gold prices offsetting marginal YoY declines in buyer counts. The impact of Q2FY25’s high base (due to custom duty reduction) was offset by early onset of festive season in September this year. These growths were also fueled by significant investments in consumer promotions including a powerful exchange offer and marketing initiatives, to stimulate demand amidst elevated gold prices. Studded jewellery in Tanishq, Mia, Zoya portfolio collectively grew in mid-teens outpacing gold (plain) jewellery growth, while gold coins continued their strong run for the quarter reflecting investment sentiment in this sub-category. The LFL growths for Tanishq and CaratLane were in double digits. Caratlane’s revenue grew ~30% YoY.
Rivaah store - Tanishq inaugurated its first wedding destination store ‘Rivaah’, in Delhi, showcasing exquisite jewellery for the brides-to-be and marking a major milestone in the brand’s journey.
Store addition - Of the 34 new store additions (net) in India, 6 were in Tanishq, 18 in Mia and 10 in CaratLane respectively.
* Watches and wearables: Segment revenue grew ~12% YoY (lower vs. initial estimate of ~18%) led by analog segment clocking ~17% YoY growth. Growth was anchored by Titan brand posting strong double-digit growth and healthy volume offtake for the festive season. Smart wearables category declined ~23% YoY continuing to mirror the broader stress in the segment. Division added 5/7/3 stores of Titan World/ Helios/ Fastrack
* Eyecare: The segment grew 9% YoY (lower vs initial estimate of ~12%) led by healthy performance from international brands, sunglasses and growth in E-commerce channel. Division added 5 Runway stores in Q2.
* Emerging businesses and others: Fragrances grew ~48% YoY led by strong volume growths in Fastrack and Skinn. Women’s Bags grew ~90% YoY led by network expansion and Taneira grew ~13% YoY. Irth added 2 stores in the quarter in the cities of Delhi and Kolkata and Taneira closed 2 stores during Q2. Growth in emerging business was significantly higher vs our estimate.
* International business grew ~86% YoY led by Tanishq, more than doubling its business in the USA market and clocking strong double-digit growth in the GCC market. Tanishq added a new store in Virginia, USA in Q2.
* Overall standalone performance: Overall standalone revenue is expected to grow ~18% YoY led by 19% YoY growth in jewelry business (ex-bullion). We expect jewelry EBIT margin of 11.1% (ex-bullion sales; ~30 bps down YoY). Overall, we estimate standalone EBITDA/ PAT growth of 48/ 53% YoY.
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