Tanishq sees better recovery in demand in smaller towns- TITAN

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Edited excerpts of an interview with Mr Arun Narayan, Vice President, Category, Marketing & Retail, Tanishq at Titan Company Limited.; dated 07th October 2020 from Retail Economic Times:

Almost all Tanishq stores are open across the country and the Company has seen a really encouraging response from consumers. There has been positivity because of the festivals from August onwards. The Company believes that as they head into Dussehra and Diwali, the sentiment should only improve.

In towns, where malls contribute to a larger part of their business, the recovery has been even slower but there has been a steady improvement month on month and that gives them the confidence as they head into Dussehra and Diwali. Consumers are waiting to bring in positivity into their lives after months of being restrained and locked down and that is going to play out over the next two months i.e., in October and November.

The Company saw a greater improvement in plain gold and studded jewellery. In August, there was a period when the Company saw more investment buyers and increased demand for gold coins. That was the time when gold rates were going up significantly for maybe two weeks. But now that gold rates have cooled down, they found that recovery is pretty much even across both plain gold as well as studded jewellery.

The management is fairly optimistic about this season for many reasons; one is deferred demand from wedding shoppers. Weddings have got deferred from quarter one of this year to November, December and some of them also to quarter four and they believe that those who have weddings in their families will be back to shop for jewellery. Second, many consumers buy every year during this auspicious period and the Company knows they will be back.
Consumers seem to have accepted that gold rates may remain range-bound or fluctuate, but there is a belief that at least till this festive season, they may not see a significant uptick.

The Company has more than 13,000 customers who bought jewellery through video calls.
One can buy jewellery from the comfort of their homes, sitting with their family, through video calls and can make a remote contactless payment. All the documentation and invoices can be emailed to the customers and they can get the latest catalogues on their phone or device. One can buy jewellery from their nearest Tanishq store from the comfort of their homes. It is a whole new experience for the Company & the consumers as well with the virtual try-on and video calling. The way consumers have adopted that across metros and smaller towns has been really fantastic.

Consensus Estimate: (Source: market screener website)
The closing price of Titan Company Ltd was ₹ 1,254/- as of 08-October-2020. It traded at 127.1x/ 60.0x/48.8x the consensus EPS estimate of ₹ 9.9/20.9/25.7 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 1,068/- implies a PE multiple of 41.5x on FY23E EPS of ₹ 25.7/-.

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