“Titan has a strong runway for growth, given its market share of sub-10% in the Indian jewellery market and continued struggles faced by its unorganized peers. Its medium-to-long-term earnings growth visibility is nonpareil among large-cap consumer and retail companies,” the brokerage firm Motilal Oswal said.
“Despite the volatility in gold prices and COVID-led disruptions, earnings CAGR have been stellar at 24% for the past five years ending FY22. We expect this trend to continue, with a 26% earnings CAGR over FY22-24”, the brokerage added.
The brokerage further said that Titan has been the standout performer among all of its consumer peers, in terms of revenue, earnings, as well as stock price performance over the past five years. For a company of its size, sales of Rs 366 billion (USD4.6b) in FY23E and the 20% revenue and earnings CAGR are extremely impressive.
“Titan maintained its strong growth trajectory (three-year Revenue/PAT CAGR at 20%/27%), even during the COVID-impacted period (FY20-FY22). This was especially commendable for a business that is predominantly a brick-and-mortar retailer. This was achieved, despite a near washout in 1QFY21 due to the first COVID wave and much lower than usual sales in 1QFY22 due to the second wave,” Motilal said in a report.
In its May 2022 analyst meeting, the management aimed to grow the jewellery business by 2.5x over FY22-27, which the brokerage firm believes is achievable given Titan’s lower share (less than 10%) in the Indian jewellery market and its initiatives on various fronts to expand its footprint (store, wedding, studded and regional strategy).
Targets for growth by the Titan in other businesses are also aggressive. For watches and wearables, the company is targeting Rs 100b in sales, with an EBIT margin of 18% in five years, which is a massive growth from its FY22 sales of Rs 23b and an EBIT margin of 6%. The targets for eyewear, ethnic wear (Taneira), and international business are also aggressive.
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