Target: ₹4,026
CMP: ₹3,410.75
Titan Company reported its Q3-FY25 results in line with expectations, with margin impact from higher gold coin sales and lower studded sales. Revenue and EBITDA grew at 25.2% and 7% respectively, while PAT saw a slight decline of 0.6%.
The jewelry division, excluding bullion sales, saw a strong growth of 26.6%, driven by wedding-related purchases and a healthy same-store sales growth of 22%. Management attributed this growth to higher gold sales due to lower custom duty, strong buyer growth in lower ticket sizes, and double-digit growth in watches.
Despite the solid performance, the jewelry segment’s EBIT margin declined to 9.2% due to a one-time custom duty loss of ₹250 crore, lower studded mix, and higher gold coin purchases. Management maintained their EBIT margin guidance for FY26E at about 11-11.5%.
Based on revised estimates and the performance in the first 9 months of FY25, we reiterate a Buy rating on Titan Company with a target price of ₹4,026 based on DCF valuation (implying 47.6x 27E EPS).
Risks: Irrational competition, lower demand, and rising gold prices.
Published on February 6, 2025.
