Buy Titan Company; target of Rs 1215: Emkay Global Financial

Emkay Global Financial's report on Titan Company

Titan's quarterly update indicated a strong revival in the Jewellery business, with a recovery rate of ~98% (excluding the sales of raw gold) in Q2FY21. Sep'20 jewellery sales remained decent despite the inauspicious period and a 15-day delay for the commencement of the festive season (mid-Oct in FY21 vs. late-Sep in FY20). The division added 8 net-new Tanishq stores in Q2FY21 (14 in H1). Studded Jewellery is yet to recover to last year levels, whereas gold coin sales remained high in Q2FY21 as well. Wedding jewellery segment performed well during the quarter. The company continued to sell excess gold in its inventory and the quarter had sales of Rs3.9bn (after Rs6.1bn in sales in Q1FY21) of raw gold. This is likely to generate liquidity.

Outlook

TTAN remains our top pick among discretionary names as we believe that the pace of recovery will improve significantly with the unlocking and the onset of the festive season which can drive more upsides. Maintain Buy.

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