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MOSL: TITAN COMPANY-Jewelry sparkles for another year with 20%+ growth

Titan Company: Jewelry sparkles for another year with 20%+ growth; Management’s confidence on further overall 20% sales growth heartening

(TTAN IN, Mkt Cap USD14.2b, CMP INR1107, TP INR1300, 17% Upside, Buy)

 

TTAN has released its pre-quarterly update for 4QFY19 (and also FY19). Key highlights:

• The company achieved overall sales growth of ~21% in FY19. Jewelry sales grew by ~22% after increasing by 25% in FY18, thereby exceeding the originally envisaged 20% five-year sales CAGR target for the second consecutive year .
• Moreover, management’s confidence on further 20% overall sales growth in FY20 – despite a muted economic outlook – is heartening.
• Watches division reportedly continued its healthy growth momentum for the past few quarters, ending the year with ~16% growth (implying 14% growth in 4QFY19).
• Eyewear achieved revenue growth of ~23% for the full year (implying 18% growth in 4QFY19).
• There is no material change to our EPS estimates. We maintain our Buy rating with a target price of INR1,300, valued at 51x Mar’21 EPS, ~15% premium to three-year average multiple because of its strong earnings growth prospects (~26% EPS CAGR over FY19-21E).