Titan Company Gets 'Buy' Rating with Target Price of Rs 5161: Prabhudas Lilladher

Titan Company's Outlook Remains Positive Amidst Volatile Gold Prices

Prabhudas Lilladher's research report on Titan Company highlights a series of factors that contribute to the company's positive long-term outlook. The research firm has raised its earnings per share (EPS) estimates for FY27 and FY28 by 1.9% and 1.7%, respectively.

The key drivers behind this upward revision include a healthy jewellery demand outlook, despite the volatility in gold prices. Additionally, the average ticket size across various formats is expected to rise, and the company's order book in its TEAL (Titan Engineering and Automation Limited) segment is strong in both machine automation and aerospace. Furthermore, the research firm believes that jewellery EBIT margins have bottomed out and will no longer be a drag on the company's performance.

While elevated gold prices may impact volumes in the short term, Prabhudas Lilladher expects the next two quarters to witness strong value growth. This is because prices will be higher by 50-55% at current gold prices, which will drive demand for the company's products. In the long term, the research firm is positive about Titan Company's prospects, citing several factors.

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Key Growth Drivers

1. Higher gold prices will give Titan Company an advantage in sourcing and inventory funding, while the consumer shift to branded chains is expected to accelerate.
2. The success of lightweight jewellery (9k and 14k) in Mia/Caratlane and 18k jewellery in Tanishq and Be-Yon in the large gift segment (LGD) will drive value growth.
3. The emergence of Caratlane and TEAL as new growth contributors will further boost the company's prospects.

Estimates and Recommendations

Prabhudas Lilladher estimates a 25% EPS compound annual growth rate (CAGR) over FY26-28. The research firm values Caratlane and TEAL at Rs225 and Rs154 per share, respectively, and arrives at a sum-of-the-parts (SOTP) based target price of Rs5161 (Rs5102). The firm retains a "Buy" recommendation for the company.

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Note: EPS estimates for FY26 are not provided in the original text.