Emkay Global
Titan Company (Buy)
Target: ₹1,450
CMP: ₹1327.10
Titan Company has been one of the fastest-growing companies in our consumer universe with a 10-year profit CAGR of 20 per cent. The Jewelry segment offers a huge growth opportunity, with Titan having a strong brand franchise with sizable market share gain potential.
Tanishq’s presence is still small and a comparison with auto names indicates huge headroom for penetration gains. We note that Tanishq has a network of only 340 stores in 210 towns as against Maruti and Royal Enfield having a store network of 2,300 and 900 with presence across 1900 and 680 towns, respectively. This offers Tanishq a huge headroom for penetration gains across towns with similar target households.
Titan's growth strategy focused on store expansion, wedding segment and middle India has resulted in strong share gains with growth at 2x compared to top 13 players. Strong omni-channel initiatives and weak competition make it even better placed now to accelerate share gains.
We hence expect the jewellery division to sustain high growth momentum in the medium term. Recovery in other businesses and studded mix, cost savings and turnaround of Caratlane/eyewear are likely to drive margin gains and strong earnings from FY22.