Titan - Navigating Growth Through Innovation, Adaptability: Motilal Oswal

Motilal Oswal Report

Titan Company Ltd., with its superior competitive positioning (in sourcing, studded ratio, youth-centric focus, and reinvestment strategy), has continued to outperform other branded players. The brand recall and business moat are not easily replicable; therefore, Tanishq’s competitive edge will remain strong in the category. The store count reached 3,096 stores as of June-24, and the expansion story remains intact.

Titan’s Ebitda margin has been under pressure during FY24 owing to a lower studded mix. It will be critical to monitor the margin outlook amid intensifying competition.

The non-jewelry business is also scaling up well and will contribute to growth in the medium term. The business currently accounts for 12% and 9% of revenue and Ebit, respectively.

We model 16%/18%/20% revenue/Ebitda profit after tax compound annual growth rate during FY24-26E. Titan’s valuation is rich, but it offers a long runway for growth with a superior execution track record. Reiterate Buy with a target price of Rs 4,000 (based on 65 times June-26E EPS).

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