Titan Industries Long Term Call

Hem Securities is bullish on Titan Industries, and maintained a buy rating on Titan Industriesthe stock with a target price of Rs 1630.

According to Hem Securities, interested investors can purchase the stock on declines with a strict stop loss of Rs 1450.

Today (May 21), the company’s shares opened at Rs 1,190, as against its last closure at Rs 1,12.40 on Tuesday (May 20), on the Bombay Stock Exchange (BSE). Current EPS and P/E ratio stood at 35.66 and 33.71 respectively. The share price has seen a 52-week high of Rs 1795 and a low of Rs 858 on BSE.

Titan Industries is focusing on bigger stores and premium collections to steer its jewellery business ahead.

Tanishq, the company`s jewellery brand, grew by 57% to Rs 20.28 billion during financial year 2008 on the back of retail expansion and improvement in per-store growth. Tanishq opened 30 retail stores during fiscal year 2008, taking the tally to 130 stores.

The company is focusing on special collections, diamond jewellery and bigger stores of about 4,500 sq ft. Currently, the average store-size for Tanishq is 1,000-1,500 sq ft. The stores operate on the franchise model.

Tanishq will make its much awaited foray in the US market early this quarter. Initially, it plans to open two pilot stores at Chicago and New Jersey with a retail format of 1,800-2,000 sq ft.

Meanwhile, it plans to tap small cities by opening 15 Gold Plus outlets, its jewellery store brand for semi-urban markets. Launched two years ago, Gold Plus clocked Rs 2 billion revenues during fiscal year 2008.

The company has posted excellent results during the year ended March 31, 2008. Net sales for the same period climbed up to Rs 3046 million showing a growth of 42.57%.

The revenues from the jewellery and watches segment have been on a continuous uptrend. Net profit margins have been under pressure but the ongoing expansion plans of the company will enhance the profitability too. EPS for the year ended March 2008 comes out to Rs 33.24 against Rs 22.50 in 2007. The company has posted a CAGR of 39.02% in the topline and 91.74% in the bottomline over a period of 3 years.

The diversified range of products and strong brand presence in the market are expected to leverage its growth. New ventures like Titan eye+ and Gold plus are targeted to tap opportunities in the unexplored segments. The company’s foray into Precision engineering is also expected to become a significant contributor to the revenues in the coming years.