Dolat Capital's research report on Titan
Net revenues grew by 34.3% YoY to ` 56.7bn – came ahead of our estimate. Jewellery business reported a robust 36.8% sales growth mainly led by grammage growth of 20%. The segment benefited from strong growth in both plain and studded jewellery. The plain jewellery segment was driven by a large order from institutional order of ` 2bn. The studded jewellery contribution remained stable at 25%, indicates that the category also posted +35% growth during the quarter. Though margins in the jewellery business expanded during the quarter, overall margins declined due to high A&P spends in watch business. We believe the growth in jewellery category would continue, despite unfavorable base benefiting from new store additions and new customer acquisition. Further, Titan, being one of the largest players in the organized industry with attractive offerings, we believe that it would emerge as a clear winner of the shift from unorganised to organised. Furthermore, changing trend of buying jewellery for fashion instead of investment would enhance premiumization.
Outlook
We have revised our estimates upward to factor in Q3 performance. Upgrade to BUY with TP of ` 1,139 (48x FY21E).
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Read More First Published on Feb 8, 2019 03:45 pm
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