Will Titan's 67% acquisition of Damas boost profitability in GCC region?

Business Standard

5 days ago

Titan share price: Titan shares were in focus today after the company announced that Titan Holdings International FZCO, its wholly owned subsidiary, has entered into a Definitive Agreement with Damas International Limited, a UAE-based wholly owned subsidiary of Mannai Corporation QPSC, Qatar.
On the bourses, Titan share price popped about 0.75 per cent to an intraday high of ₹3,459.35 per share. At 9:50 AM, Titan share price was trading at day's high levels, up 0.75 per cent at ₹3,459. In comparison, BSE Sensex was up 0.20 per cent at 82,368.38 levels.
The agreement with Damas International pertains to the proposed acquisition of a 67 per cent stake in Damas LLC (UAE), the current holding company for the Damas jewellery business across the GCC region.
C K Venkataraman, managing director of Titan, said, 'After successfully establishing Tanishq in the GCC countries and the USA, our ambition for a global jewellery play is moving to the next stage. With the Damas acquisition, Titan Company is stepping out from its diaspora focus into other nationalities and ethnicities.'
'Damas is a prestigious brand revered in the GCC markets for its product innovation, quality and customer experience. The brand's rich legacy and strong presence in the GCC region align perfectly with our vision to deliver exceptional value to customers through iconic, consumer-focused businesses. The acquisition not only creates a significant new global opportunity for Titan, but also enhances Titan"s overall position in the jewellery market in the GCC countries and brings in multiple synergy benefits in talent, retail networks and supply chain. We are happy to welcome Damas into the Titan family. We look forward to building on Damas' rich heritage while driving the brand's sustainable growth journey together with Mannai Corporation," Venkataraman added.
As part of the transaction, Titan Holdings will acquire the 67 per cent shareholding, subject to the fulfillment of conditions precedent outlined in the agreement, along with necessary regulatory approvals in applicable jurisdictions.
'The valuation for acquisition of 67 per cent of the target entity for the Proposed Transaction is arrived at on the basis of an Enterprise Value (EV) of AED 1,038 million. The net consideration would be subject to customary adjustments for debt/cash/ other adjustments,' Titan said, in a statement.
Additionally, after December 31, 2029, Mannai will have the right to sell, and Titan Holdings will have the right to acquire the remaining 33 per cent stake in Damas LLC. This future transaction will be governed by terms and conditions set forth in the definitive agreement.
'The Proposed Transaction is strategically significant for Titan's jewellery business as it will facilitate the expansion across the 6 GCC countries of UAE, Saudi Arabia, Qatar, Oman. Kuwaij and Bahrain. The region is exhibiting robust economic growth creating a demand for differentiated, high quality offerings rooted in Arabian aesthetic and appealing to sophisticated clientele seeking unique, culturally resonant designs,' Titan added.
JM Financial on Titan-Damas Deal
Analysts at JM Financial noted that Titan's acquisition of a 67 per cent stake in Damas LLC marks a major strategic move, granting the company access to the Damas jewellery business (excluding the Graff Monobrand franchise). The deal values Damas at an enterprise value of AED 1,038 million, or 0.7x EV/sales for CY24.
The brokerage highlighted several positives from the transaction. It positions Titan among the top 3-4 players in the world's fourth-largest jewellery market, provides access to 146 premium retail locations in the UAE, and presents an opportunity to boost profitability in the GCC region through synergies across talent, retail networks, and supply chains.
JM Financial, however, is not incorporating the acquisition into its financial estimates yet, pending more granular details such as profit and loss, balance sheet, and cash flow data. However, the brokerage maintains a 'Buy' rating on Titan with a target price of ₹3,725, valuing it at 57x Mar'27 EPS.
Meanwhile, Morgan Stanley reportedly has maintained its 'Overweight' stance on Titan, with a target price of ₹3,876 per share.