Event
Titan released its 1QFY19 quarterly operational update. The key takeaways are
Key details
Our view
While continued healthy growth in watches and recovery in eyewear business is encouraging, Jewellery division performance is likely to be muted, impacted by weakness in consumer demand and unfavorable base. Given the scenario, we are factoring a 1.5% yoy revenue growth for Titan with a 9% yoy PAT growth in Q1FY19. This assumes flat sales for jewellery division with an 80bps yoy EBIT margin improvement aided by improved mix. Given the weaker growth sentiment in Q1FY19, stock could see a correction in the near term which could provide an opportunity to buy. Maintain Outperformer rating on the stock.
Titan is engaged in the watch division where Co. manufactures and sells a variety of watches with varying price range within India and overseas; in the jewelry division where Co. works through Tanishq and Zoya. Tanishq has a range of jewelry studded with diamonds or coloured gems in 18 kt gold, 22 kt pure gold and platinum; and Zoya is a chain of luxury jewelry boutiques; in the eyewear division where Titan Eye+ retails products which showcase contemporary designs, coupled with optical exams with Sankara Nethralaya; and in the precision engineering division, Co. sells its components globally and helps build machinery.
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