Titan Q2 Results Review - Margins Under Pressure; Downgrade To 'Sell': Dolat Capital

Dolat Capital Report

Titan Company Ltd.'s Q2 FY25 profitability was below estimate. The jewellery segment reported 25.5% YoY (ex-bullion) sales growth led by increased gold purchases following a reduction in custom duties. The overall buyer growth was at ~12%, while average selling price grew by ~10%.

The jewellery division’s Ebitdam was impacted due to a one-time charge of ~Rs 2.9 billion attributed to custom duty reduction and lower studded mix. Going ahead, margins are expected to remain under pressure due to increased discounting and competition.

We have reduced our FY25/26E EPS estimate by 8.6/6.8% at Rs 43.6/57.4 to factor in inventory losses from declining gold prices and increased discounting.

We have also introduced FY27E EPS at Rs 66.8. Given heightened competition and ongoing margin pressures, we value the stock at 45x FY27E resulting in revised target price of Rs 3005. Consequently, we are downgrading the stock to ‘Sell’ rating.

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