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Titan is actively looking for new expansion prospects.

TITAN’S Jewellery sales increased by 23.5% y-o-y in Q4, indicating a significant growth in revenue from this segment. Ebit margin was 13.2% in Q4, indicating that the company is profitable. Despite demand hiccup, the outlook for Titan is strong, indicating that the demand for its products is expected to pick up again. Titan is actively pursuing new opportunities for growth, indicating that the company is not solely reliant on its current jewellery business for future growth. It indicates that Titan is seen as a company with significant potential for growth, making it an attractive investment opportunity. Recommend buy in Titan shares with a target price of Rs 3,500.

Solid jewellery momentum. In the past 5 years, Titan Jewellery grew at a 20% compound annual growth rate (CAGR) despite the COVID-19 disruption for 2 years and gold price-led demand volatility. This momentum continues apace and Titan aims to grow its jewellery business by a 20% CAGR in the next 5 years.

The company is gaining its market share by expanding its network and strengthening its customer base. The strong network effect suggests that earnings are expected to double in the next 3-4 years, ceteris paribus. In addition, the company is pursuing various new growth opportunities that will likely contribute to this growth trajectory.

International jewellery foray is scaling up fast (will go from 7 stores to 25 in FY24), which can add a potential surprise in jewellery revenue growth; Taneira is also set to expand rapidly in the next 5 year and could be a Rs 10-20 bn business; Caratlane continues to grow exponentially; even the Eyecare business model has been perfected and is already a Rs 10 bn business capable of growing in the mid-teens, with similar margins; Valuation is building in 13% long-term earnings expectations, well within the growth opportunity; In sum, considering the potential doubling of earnings in the next 3-4 years, as well as the momentum in jewellery growth and the scaling up of new businesses, it is unlikely that there will be a compression of multiples. Overall, Titan represents a compelling growth story for compounding returns within the Indian consumer market.



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