ICRA has assigned AA-plus rating to Tata enterprise Titan's Rs 1,700 crore fund-based instrument and A1-plus to Rs 1,500 crore commercial paper with outstanding outlooks.
The ratings reflect the company's leadership position in orgsed jewellery, watches and eyewear segments supported by its strong brands, integrated manufacturing capability, wide distribution and service networks and diversified product portfolio in terms of price points and styles, said ICRA.
Titan's jewellery segment grew at 6 per cent year-on-year during FY20 despite the moderation in volumes due to higher gold prices and COVID-19 related lockdowns in the latter half of March.
ICRA said Titan has a robust financial profile with strong cash accruals, moderate capital expenditure requirements, comfortable leverage metrics and strong liquidity.
Titan is a part of the Tata group of compes which lends it strong financial flexibility while also supporting its brand equity and customer acceptance of new product launches.
The ratings, however, continue to be constrained by the regulatory risks and competition in the domestic jewellery retail space, especially from regional players.
Regulatory actions in the jewellery segment have impacted Titan in the past, both on the demand front through enhanced disclosure norms for customers and limits on cash transactions besides on the supply side through curbs on imports, restrictions on gold on lease financing.
However, ICRA said the large size of the Indian jewellery industry, which combined with Titan's brand strength and the market shift towards orgsed players, translates into strong long-term growth prospects for the company.
The company also faces margin pressures in segments such as eyewear because of high competition as well as in nascent segments such as perfumes and clothing (Taneira). The ratings continue to be constrained by the vulnerability of jewellery demand to elevated gold prices which have continued to rise over the first quarter of FY21 also.
At 3.25 pm, Titan's stock was trading 3.76 per cent higher at Rs 997.80 per unit.
( With inputs from ANI )