"We are confident that Titan will achieve its guidance of 2.5x jewellery business revenues by FY22," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.
Akash Jain
We believe after a significant rally in Titan Company post implementation of GST, it has become expensive and there is little margin of safety. The rally was supported by factors like growth in diamond jewellery activation, the revised gold exchange policy and watches segment performing well strongly in the quarter, aided by the multi-brand and e-commerce platforms.
The watches business also benefited from a regulatory change during the period, with the government lowering the goods and service tax (GST) rate on the category to 18 percent from 28 percent. The government also reduced the GST rate on sunglasses to 12 percent from 18 percent during the quarter and Titan’s watch and eye wear divisions have corrected prices accordingly.
The company’s Prescription Eyewear segment, too, sustained its growth momentum, while sunglasses business continued to suffer. Traditionally, September-December quarter yields the largest revenue for Titan since both Dussera and Diwali festive season falls almost entirely in this quarter every year. The festive season did not disappoint this year either.
We will always keep a watch on this company as it is a secular story on India’s consumption theme. The company has witnessed strong revenue growth, operating profits for jewellery and watches segment. We are confident that Titan will achieve its guidance of 2.5x jewellery business revenues by FY22.
Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.