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UBS Investment Research
Titan Industries
B ridge to luxury
Titan’s has a new strategy to target consumer upgrades
We reiterate our Buy rating on Titan Industries (Titan) and increase our price target
from Rs 4,100 to Rs 5,000. The company’s new strategy involves preparing itself
for the upgrading consumer across its watch, jewellery and optics businesses. We
believe this is a visionary strategy, catering to the top-end as well as segments
below too.
Helios and Tanishq high-end
Titan’s new “bridge to luxury” format – Helios will be a pan-India premium watch
retailer with ~40 brands, while also retailing Titan’s topend brands. Tanishq’s new
strategy includes setting up of 6-8 super-premium company-owned stores. We expect
a new celebrity endorsement, high-end product should improve mix; diamond
jewellery expected to grow from ~25% of Tanishq sales to ~40% in 2-3 years.
Earnings forecast and PT upgraded, bonus and split announced
We have increased our EPS estimates for FY12E from Rs 117 to Rs 136 (+16%)
and for FY13E from Rs 141 to Rs 162 (+15%). We are increasing our price target
from Rs 4,100 to Rs 5,000. We believe the announced 1:1 bonus and 1:10 share
split will be a sentiment positive and possibly improve liquidity on the stock.
Valuation: We recommend a Buy on the stock
We derive our price target using UBS’s VCAM tool, assuming a WACC of 11.2%,
intermediate growth rate of 17.0%. Titan would trade at 22x EV EBITDA FY13E
at our price target. We believe Titan will sustain its premium due to the rise in
discretionary consumption and the strong brand equity across categories.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Titan Industries
B ridge to luxury
Titan’s has a new strategy to target consumer upgrades
We reiterate our Buy rating on Titan Industries (Titan) and increase our price target
from Rs 4,100 to Rs 5,000. The company’s new strategy involves preparing itself
for the upgrading consumer across its watch, jewellery and optics businesses. We
believe this is a visionary strategy, catering to the top-end as well as segments
below too.
Helios and Tanishq high-end
Titan’s new “bridge to luxury” format – Helios will be a pan-India premium watch
retailer with ~40 brands, while also retailing Titan’s topend brands. Tanishq’s new
strategy includes setting up of 6-8 super-premium company-owned stores. We expect
a new celebrity endorsement, high-end product should improve mix; diamond
jewellery expected to grow from ~25% of Tanishq sales to ~40% in 2-3 years.
Earnings forecast and PT upgraded, bonus and split announced
We have increased our EPS estimates for FY12E from Rs 117 to Rs 136 (+16%)
and for FY13E from Rs 141 to Rs 162 (+15%). We are increasing our price target
from Rs 4,100 to Rs 5,000. We believe the announced 1:1 bonus and 1:10 share
split will be a sentiment positive and possibly improve liquidity on the stock.
Valuation: We recommend a Buy on the stock
We derive our price target using UBS’s VCAM tool, assuming a WACC of 11.2%,
intermediate growth rate of 17.0%. Titan would trade at 22x EV EBITDA FY13E
at our price target. We believe Titan will sustain its premium due to the rise in
discretionary consumption and the strong brand equity across categories.
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