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Prabhudas Lilladher Report
We are cutting FY25/26 earnings per share estimates by 12.5% and 9.9% given cut in Ebit margin guidance across Jewellery and Watches. Titan Company Ltd. 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 H1 FY25 performance to remain tepid due to higher gold prices and weak marriage season, with strong recovery in H2 FY25. We expect back ended returns and advise accumulation at lower levels for medium term gains with DCF based target price of Rs 3578 (Rs 3767 earlier).
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