ICICI Securities: Titan Company - Best Positioned To Gain From Faster-Than-Expected Recovery
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ICICI Securities Report
Titan Company Ltd.’s Tanishq revenues have recovered to 90% of pre-Covid-19 levels – significantly ahead of consensus expectations – likely drivers are -
1. boost to volumes due to (somewhat) stable gold prices,
2. consumers have (likely) started accepting higher gold prices and expect further inflation and
3. market share gains (liquidity challenges for smaller competitors).
Upside trigger is gold price correction or volatility leading to surge in volumes ( (recall the 67% volume growth in Q1FY14 - see table 1)
That said, introduction of fixed making charges, even though a small proportion currently, is something that we will watch carefully.
Profitability under pressure (in FY21) from inferior studded share is adequately priced in (stock down 12% in last one year).
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