Titan Aims 15-20% Top-Line Growth Over FY24-27: What Should Investors Do With Rekha Jhunjhunwala-Backed Stock?

Aiming to keep expanding both jewellery and watches and elevate investment behind emerging segments like Taneira, Titan Eye+, Wearables, and Women hand bags, Titan Company, a major player in consumer discretionary, said it is looking at 15-20% topline growth over FY24-27. This news put shares of the company in the spotlight. During the quarter that ended in March 2024, Rekha Jhunjhunwala owned a 5.35% stake in the Titan Company, which as of Thursday's closing session was valued at Rs 15,781 Cr. For its jewellery section, Titan Company has lowered its EBIT margin forecast band from 11.5-12.5% to 12-13%. Meanwhile, for its watches and wearables segment, it is targeting a 15% sales CAGR with EBIT margins of 12.5-14% and wearables breakeven in FY27.
For its eye care segment, the company is targeting revenue/EBIT margins targets of Rs20bn/12% by FY27 while Taneria to grow its topline by 3X over FY24-FY27 and revenue/store target of Rs10+bn/125 stores by FY27 according to Prabhudas Lilladher.

Commenting on the growth outlook of Titan, the brokerage firm Prabhudas Lilladher said in a note that "We are cutting FY25/26 EPS estimates by 12.5% and 9.9% given cut in EBIT margin guidance across Jewellery and Watches. TTAN in looking at 15-20% topline growth over FY24-27 as it aims to further scale up both Jewellery and watches and increase investment behind emerging segments like Taneira, Titan Eye+, Wearables and Women hand bags. Although jewellery business is likely to sustain 15%-20% sales CAGR, EBIT margin guidance band is cut from 12-13% to 11.5-12.5%. Near term pressure emanates from rising competition from both regional and national players, impact of rising gold prices on demand and its ability to charge premium on physical gold and making charges."

"Watch business will focus on premium/ economy segment, which has just single digit market share, however price erosion in high growth wearables segment will drag margins in the interim. Eyecare business has reached a critical mass and benefits of cost restructuring will start being reflected from FY25 itself. IBD is looking at 5% contribution to sales by FY27 with 25 Tanishq stores. We estimate 20.2% PAT CAGR over FY24-26. We expect 1H25 performance to remain tepid due to higher gold prices and weak marriage season, with strong recovery in 2H25. We expect back ended returns and advise accumulation at lower levels for medium term gains with DCF based target price of Rs3578 (Rs. 3767 earlier)," the brokerage firm further added.

Titan FY24 Management Comments

Mr. CK Venkataraman, Managing Director of the Company stated that: "FY24 was yet another satisfying year for Titan. Our Jewellery business continued to grow in prominence achieving a proud milestone of "Rs 40,000+ crores in consumer sales. Together our brands of Tanishq, Mia, Zaya and Caratlane are meaningfully innovating and offering the best variety of choices for the discerning woman of tomorrow. Our Wearables business is making good strides contributing to the ambitious growth targets that the business has embarked upon. The EyeCare business has re-calibrated itself in this year of consolidation and has launched exciting new product launches for the fashion-conscious youth . Tanieras expansions are gathering pace, and their stores are accessible across the length and breadth of the country. Through their Weavershalas initiative, the brand is assiduously striving to protect traditional heirloom methodologies whilst embracing modernity practices. As we look forward to FY25, all businesses ofTitan Company Limited are single-mindedly continuing to focus on satisfying the ever-evolving needs of our lifestyle consumers."

Titan Share Price Target

"Recent elevated gold prices will have an impact on the profitability of Titan's jewellery business in the near term. Being a large player in the branded jewellery space, Titan has a strong ability to recover the margins in the medium term through relevant strategies. The company is eyeing a revenue CAGR of over 20% during FY2022-FY2027, led by an ambitious growth plan in the medium term. A strong growth outlook, focus on sustained market share gains, and strong balance sheet make it the best play in the discretionary space. Near-term headwinds on margins might lead to weakness in the stock price, which should be considered as an opportunity to buy this quality stock. We maintain our Buy recommendation on the stock with a revised PT of Rs. 3,990. The stock is currently trading at 74x and 58x its FY2025E and FY2026E earnings, respectively," said the research analysts of Sharekhan in a note.

Disclaimer

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