Titan, Dr. Reddy's, Berger Paints, Mankind Pharma, KEC, ABB, Sai Silk And More Q2 Review: HDFC Securities

HDFC Securities Institutional Equities

Titan - Competitive intensity elevated, margins disappoint

Titan Company Ltd.'s consolidated jewellery sales (ex-bullion) grew 27% YoY to Rs 117.8 billion (our estimate: in-line). Gold jewellery demand witnessed a step-up jump post the Jul-24 customs duty cut. This gold rush lasted well into mid-September (consol. topline growth stood at 16% YoY at Rs 145.3 billion; in-line).

Margins, however, disappointed. Normalising for the Rs 2.9 billion hit due to customs duty reduction, jewellery Ebitm (consolidated) contracted 486 bps YoY to 8.3% versus our estimate’s 9% (note: normalised standalone jewellery Ebitm came at 11.4%).

Non-jewellery businesses performed well. While we tone down our FY25 EPS by 9.5%, FY26/27 estimates remain largely unchanged. We maintain our Reduce rating with a revised DCF-based target price of Rs 2,950/share (implying 50 times Sep-26 P/E).

Berger Paints - Demand remains subdued; margins disappoint

Berger Paints India Ltd.’s revenue remained flat at Rs 27.7 billion (in-line). Volume/value growth for Q2 stood at 3.6%/-0.4%. Decorative business saw single-digit volume growth, impacted by weather conditions and flooding in key markets.

The premium segment performed well, while mass-consumption products experienced flat/negative growth. A new team has been established to drive market share growth in urban markets, with management targeting an increase from 10% to 15% over the next three years.

Gross margin improved by 58 bps to 41.7%. Ebitda margin contracted 147bps to 15.6% (our estimate: 16.7%) due to higher employee costs. We cut our EPS estimates by 1-2% for FY25/26 and retain our Reduce rating with a DCF-based target price of Rs 500/share (implying 41 times Sep-26E P/E).

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