- Titan’s jewellery retail sales growth of 7% in Quarter 2 FY20 was the lowest since Quarter 1 FY17 due to high gold prices and weak consumer sentiment.
- Retail sales grew ~15% YoY growth in Aug-Sept. Sequential pick-up in growth during Aug/Sept was led by higher promotions and activations, which would hit Quarter 2 margins.
- Net addition of 21 Tanishq stores in 1st Half of FY20 was weak (full-year guidance 70, 1HFY20 guidance 30).
- Reported jewellery sales declined 2% YoY due to maturing of hedges.
- Festive season and upcoming wedding season are crucial for management target of 20% jewellery revenue growth in 2HFY20. Titan may mildly undershoot target given high base and weak demand.
Valuation: At ~56x 1-yr forward P/E, valuations are significantly higher than history (~1.75x above 5-year average). Thus with lofty expectations and expensive valuations one should be cautious of investing in the stock
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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