Prabhudas Lilladher recommended hold rating on Titan Company with a target price of Rs 844 in its research report dated May 05, 2020.
Prabhudas Lilladher's research report on Titan Company
We are cutting FY20, FY21 and FY22 EPS estimates by 7.1%, 43.7% and 28.1% as current confluence of 1) store closures due to lockdown 2) expected cut in discretionary spends by consumer 3) 20% higher gold prices 4) 54% less wedding dates in FY21 and washout of 1Q wedding season (68% of FY21 wedding season) and 5) lower new store openings shows its impact on Jewellery sales. Our Channel checks suggest significant pressure on demand and likely rush to offload jewellery post lockdown ends and need to improve designing in a post compulsory hallmarking scenario as purity plank might not work to advantage of Tanishq.
Outlook
We believe TTAN will continue to enjoy premium valuations and value the stock at 43xFY22 EPS and arrive at a target price of Rs844 (Rs1264 earlier). We retain hold and recommend accumulation on declines for long term gains given possibility of near term PE de-rating.
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