Titan remains a good bet for long term: Mayuresh Joshi

"Somewhere I think the first two quarters might see some slowness come through but a roaring comeback can be expected in Titan in the second half itself," says Mayuresh Joshi, William O Neil India.

Let us begin with Titan itself, it has been a very steady performer, steady wealth compounder over many many years, do you expect this one to be a slow year for Titan going forward?
It might be the case but looking at the update that most gold and jewellery companies have given including the likes of Titan and Kalyan, I think the numbers still seem to be sustaining, at least as far as Quarter one or the first half is concerned.

The wedding season coincides in the second half itself. A large part of the jewellery market 60% or more is associated with the wedding season market itself.

And to a large extent, the organised market is expected to grow at a compounded pace from 32% odd as the overall market should grow almost 40% in the next two to three years.

Somewhere I think the first two quarters might see some slowness come through but a roaring comeback can be expected in the second half itself.

In terms of the market opportunity itself, the expectations in terms of the market size itself compounding at a pace of 9% to 10% and with organised players probably gaining more strength. These become secular structural stories as this part of the story unfolds.

So yes, I think some softness might be expected on a sequential basis. But to a large element, I think over a longer period of time, Titan probably remains a good bet holding the performance.


What is happening on Suzlon? The market in pockets is quite excited about it. We have already seen a massive recovery from the lows, although on a very low base on Suzlon and then there is that impending fundraise as well?
Two-three things interesting happening for both Suzlon and Inox Wind. If you probably go back a tad bit in the periodicity of 2015 to 2020, the input costs were significantly higher and the tariffs were a clear mismatch in terms of what these players were having in terms of their operating expenses.

Therefore, I think a lot of the companies which were solely operating its wind business basically shutdown. Now, with the new regulations coming through, expectations of 10 gigawatt getting added over the next few years, a lot of tendering activity, both from the public and the private side expected to pick up steam.

The expectations in terms of tariffs remaining extremely firm with input costs very-very manageable at this point of time. The few existing players in the space at this juncture, including Suzlon, including Inox Wind, are probably going to be the biggest beneficiaries in terms of this regulatory change and move. Having said that, the interstate transmission charges which have also been waived off, is a significant change in terms of creating a significant amount of operating margin improvement in their balance sheets. And therefore, a lot of leverage can also get played out.

A lot of debt, which was there on the books for a company like Suzlon, is expected to improve drastically in terms of both the capital raise that can probably come through, as well as improving cash flows as orders come in the execution from here.

So I think a lot of tailwinds for the sector which is keeping stocks like Suzlon and Inox Wind in the moment.

What is the view on the big one, Reliance?
I think the developments which have probably happened in terms of the financials and also the partial buyback in terms of Reliance Retail obviously it is accretive in terms of the earnings per share as well.

If you probably map this along with the stock performance today, I think it is very logical in terms of Reliance showing a smart move in today's trade.

But over a long period of time, if you probably drag this up over the next two to three years, the expectations from an immediate perspective in terms of how Singapore's GRMs will fare, Reliance access to multiple feedstocks obviously will ensure that it gets a premium to those share upon GRMs.

Having said that, I think the overall business perspective both from retail and Jio is expected to show significant amount of improvement over the next few years.

From an immediate perspective, again sequentially, there might be some element of slowdown happening, because you have probably seen a very heavy base last year.

Over the next two to three years, those earnings might actually start compounding. At the same time, the capex that Reliance is probably doing towards the hydrogen over the next few years, they are still confident of maintaining that net debt net EBITDA to very-very manageable levels, even with the kind of outgo that they will probably have over the next few years.

So immediate perspective, maybe a little bit of a softness because of the heavy base but structurally over the next two to three years, I think it is placed very very well in terms of the entire ecosystem both from retail, as well as its O to C business.


What do you feel about the urban consumption trend? You think the earnings in Q1 will reflect that or do you think the best is already behind us and I am going to include everything from Manyavar to the Titan, to the entire cluster basically?
I think it is still holding up but for the better part of the last six to eight quarters. A lot of consumption has probably held up and that has probably laid a lot of impetus in terms of the overall consolidated earnings for a lot of these retail discretionary players.

I will also put in Trent in that, because Trent is largely a tier one, tier two city kind of a franchise which probably also indicates a lot of retail discretionary spending.

But as I maintained, I think what you are looking at probably from FY20 to FY23, I think the base has become very-very heavy for a lot of these consumer-oriented companies.

And therefore, to outweigh this in FY24 by a huge margin probably looks difficult.

So, I think this year largely will be a year of consolidation for a whole host of these retail franchises.

I will also put in the QSR players, even footwear companies and therefore, a lot of these companies, if you look at management commentaries for the QSR space or footwear companies, they are actually foraying into tier three, tier four cities.

A lot of retail rural penetration has already started happening, probably diversified in terms of the urban concentration that they probably have.

But to answer your question, I think it's probably going to be a year of consolidation, because you are not going to see a significant turning speed happen on an annualised basis for most of these players.