Maintain 'buy' on Titan Industries - TP Rs.337 - Geojit BNP Paribas Financial Services

- Company's 3QFY13 same store growth displayed an encouraging trend across formats attributable to improved consumer sentiment during the quarter.

- Among these, its key jewellery segment reported volume growth of 12% versus negative growth in 1H.

- It seems that these are encouraging signs for an anticipated pick up in volume growth for FY14.

- Though headline 3Q numbers were in line, gross margins fell 170 bp due to a lower contribution from studded products.

- It is expected that product mix to improve over the next few quarters and gross margins to bounce back.

- Jewellery space addition of 0.2 million sq ft for FY13 remains on track.

- It seems that Titan is a compelling growth story and expects the company to benefit from the gradual migration of consumers towards organized retailers. Volume growth is expected to improve in FY14 as consumer sentiments revive. This, coupled with contribution from new stores should propel strong sales growth over the next few years.

- Titan's PAT is expected grow 22% over FY12-FY15, which would support its premium valuation.

- The stock is rated to buy with a target price of RS.337.

- Key risks to the target price are any sharp decline in gold prices, weaker than expected volume growth and negative regulatory changes.

Source : Equity Bulls

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