Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Titan Industries
Quality at a price
Premium to sector justified
We believe Titan should trade at a premium to other retailers given 1) limited price
competition in Titan’s product categories 2) Titan provides the best exposure to
growth in disposable income 3) Titan is the market leader across all its categories
and has 4) strong growth potential across all businesses. Titan is trading at 32x
FY12E earnings vs. sector at 29x. Titan’s implied valuation at our price target of
Rs.4,100 is 37x FY12E earnings.
Q-series findings
Based on our Q-Series “Are staples a good inflation hedge?” Titan emerges as one
of the survivors in an inflationary cycle because of Strong brand recognition in
India’s watch segment coupled with a very strong distribution network. Its
jewellery segment which dominates the branded jewellery market we believe will
remain immune to the inflationary cycle in terms of volumes as Indian culture of
buying jewellery on many occasions irrespective of prices will drive volumes. We
expect Titan to grow volumes at 10% in FY12E
Near term positive catalysts
Titan has outperformed Sensex by 90% and 8% in last 12/one month. We believe
the upside from current levels is limited. The near term catalysts for stock price
movement include 1) Q4FY11 results, 2) new product launches and 3) gold price
fluctuation.
Valuation: Buy rating with price target of Rs. 4,100
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool, assuming WACC of
~12%....
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Titan Industries
Quality at a price
Premium to sector justified
We believe Titan should trade at a premium to other retailers given 1) limited price
competition in Titan’s product categories 2) Titan provides the best exposure to
growth in disposable income 3) Titan is the market leader across all its categories
and has 4) strong growth potential across all businesses. Titan is trading at 32x
FY12E earnings vs. sector at 29x. Titan’s implied valuation at our price target of
Rs.4,100 is 37x FY12E earnings.
Q-series findings
Based on our Q-Series “Are staples a good inflation hedge?” Titan emerges as one
of the survivors in an inflationary cycle because of Strong brand recognition in
India’s watch segment coupled with a very strong distribution network. Its
jewellery segment which dominates the branded jewellery market we believe will
remain immune to the inflationary cycle in terms of volumes as Indian culture of
buying jewellery on many occasions irrespective of prices will drive volumes. We
expect Titan to grow volumes at 10% in FY12E
Near term positive catalysts
Titan has outperformed Sensex by 90% and 8% in last 12/one month. We believe
the upside from current levels is limited. The near term catalysts for stock price
movement include 1) Q4FY11 results, 2) new product launches and 3) gold price
fluctuation.
Valuation: Buy rating with price target of Rs. 4,100
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool, assuming WACC of
~12%....
No comments:
Post a Comment