MOSL: TITAN COMPANY (Buy)-Healthy momentum across key businesses

Titan Company: Healthy momentum across key businesses

(TTAN IN, Mkt Cap USD9.3b, CMP INR776, TP INR1071, 38% Upside, Buy)

TTAN has released its pre-quarterly update for 2QFY19. Key highlights:

• Growth in Jewelry segment picked up in 2QFY19, bucking the previous quarter’s muted trend, led by (a) market share expansion owing to exciting new collection launches and (b) extended diamond studded activation. Notably, growth – which was in line with management’s internal expectations – was achieved despite a weak operating environment for the jewelry industry.   
• Watches segment, too, performed strongly in the quarter, aided by new product additions and brand-building activities.
• Prescription Eyewear business also sustained its growth momentum on a like-to-like basis due to a broader assortment of products at affordable price points and aggressive marketing spend. Year-on-year reported growth is likely to be muted for the segment due to the absence of activations in 2QFY19 (unlike the year-ago period).  
• We maintain Buy rating on TTAN with a target price of INR1,070 (valued at 47x September 2020E EPS, at a 10% premium to three-year average multiple because of strong earnings growth prospects – 28% EPS CAGR over FY18-20).