Titan Q3 Results Review - Amid Gold Price Volatility Jewelry Sales Rise 23%- Centrum Broking

Centrum Broking Report

Titan Company Ltd.'s Q3 FY24 print was below our estimates; amid volatility in gold prices consol. Revenue/Ebitda/profit after tax grew 22.0%/16.2%/15.5%. Jewelry segment (including bullion sale) grew 23%, driven by strategic gold exchange offer creating customer excitement to lift wedding jewelry share. Management alluded this to,

1. 50% contribution from new buyer,

2. with 24% contribution studded revenues grew 14%, and

3. growth in international business (now 14 stores).

Moreover, jewelry segment reported 12.2% Ebit margin. Watches segment grew 21.1%, with 5.6% Ebit margin. Eyewear business cut by 4.0%, with 8.4% Ebit margin. Emerging businesses grew 25.8% led by Taneira (plus 61%), fragrances, fashion accessories (-7.0%), while Caratlane saw solid growth of 32.0%.

Gross margin lowered to 23.4% (-60 basis points); Ebitda at Rs 15.6 billion improved by 16.2% settling Ebitda margin at 11.0% (-55 bp) YoY. Titan guided to maintain operating margin ~12-13% range.

We increased earnings and retain 'Buy' rating, with a revised discounted cash flow -based target price Rs 4,255 (implying 65.6 times average. FY25E/FY26E earning per share).

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