Sharekhan's research report on Titan Company
Titan’s Q1FY2022 performance was better than Q1FY2021 due to sustained demand-led sales in April 2021, with good recovery in June 2021 after lull in May 2021. Consolidated revenue (excluding the bullion sales) stood at Rs. 3,004 crore; OPM stood at 3.9% with PAT of Rs. 20 crore. Jewellery business revenue stood at Rs. 2,467 crore (61% of Q1FY2020 sales). Pent-up demand due to deferred weddings and upcoming festive season, competitive edge due to compulsory hallmarking, and expansion in small towns would help faster recovery going ahead. Management is targeting the jewellery business’s margins to reach 11-12%.
Outlook
Trusted retail brand, strong cash kitty in excess of Rs. 2,000 crore, and focus on improving return profiles make it a good pick. We maintain Buy with a revised PT of Rs. 2,025.
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