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Titan Industries (TTAN IN, INR 3,495, Buy)
n Stellar performance; net profit jumps 82.4%; margins expand 193bps
Titan Industries’ (Titan) Q3FY11 revenues, at INR 19.5 bn, jumped ~37% Y- o- Y, above
our estimate of INR 16.5 bn. Titan posted a commendable EBIDTA of INR 1.95 bn for the
quarter vis-à-vis INR 1.07 bn for Q3FY10. EBITDA margin jumped 193bps Y-o-Y, to 10%.
Lower COGS contributed 78bps Y-o-Y, employee cost 73bps and other expenses 46bps,
to margin expansion, ad spends remained flat for Q3FY11. PAT catapulted ~82% to INR
1.37 bn, surpassing our estimate of INR 1.2 bn.
n Buoyant demand: Robust jewellery volume growth of ~19%
Buoyancy in consumer demand contributed to ~19% growth in volumes. Together with
this and 31% contributed by price hike and product mix improvement, jewellery grew a
robust 50%, to INR ~15.7 bn. Margins ballooned 196bps in jewellery, backed by
improved product mix (studded jewellery sales grew 50% while plain gold jewellery grew
20% Y -o-Y) and better operating leverage.
n Watches continue to surprise on the upside
Watches grew at an astounding 35%, to ~INR 3.3 bn led by ~28% volume growth.
Watch business grew by 15% Y-o-Y in overseas market. We believe change in product
mix has led to 332bps Y-o-Y expansion in margins.
n ‘Others’ drag on profitability; eyewear business: potential growth driver
The others segment grew at 37% Y-o-Y, to INR 552 mn; it, however, suffered PBIT loss of
~INR 52 mn in Q3FY11. Precision and engineering (US, Europe centric) had a tough
quarter however eyewear business performed satisfactorily to reduce some of the losses.
n Outlook and valuations: Robust; maintain ‘BUY’
Jewellery business continued its robust performance in Q3FY11. Owing to better- thanexpected
numbers in watches and jewellery segments and steady growth in retail space
with the company at the end of Q3FY11 having total of 624 stores across segments, we
are now confident of further uptick due to improving consumer sentiment. However, in
the absence of low base effect in the coming quarters, such high growth rate is unlikely
to be maintained. We maintain ‘BUY ’ on the stock and rate it ‘Sector Outperformer’ on
relative return basis.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Titan Industries (TTAN IN, INR 3,495, Buy)
n Stellar performance; net profit jumps 82.4%; margins expand 193bps
Titan Industries’ (Titan) Q3FY11 revenues, at INR 19.5 bn, jumped ~37% Y- o- Y, above
our estimate of INR 16.5 bn. Titan posted a commendable EBIDTA of INR 1.95 bn for the
quarter vis-à-vis INR 1.07 bn for Q3FY10. EBITDA margin jumped 193bps Y-o-Y, to 10%.
Lower COGS contributed 78bps Y-o-Y, employee cost 73bps and other expenses 46bps,
to margin expansion, ad spends remained flat for Q3FY11. PAT catapulted ~82% to INR
1.37 bn, surpassing our estimate of INR 1.2 bn.
n Buoyant demand: Robust jewellery volume growth of ~19%
Buoyancy in consumer demand contributed to ~19% growth in volumes. Together with
this and 31% contributed by price hike and product mix improvement, jewellery grew a
robust 50%, to INR ~15.7 bn. Margins ballooned 196bps in jewellery, backed by
improved product mix (studded jewellery sales grew 50% while plain gold jewellery grew
20% Y -o-Y) and better operating leverage.
n Watches continue to surprise on the upside
Watches grew at an astounding 35%, to ~INR 3.3 bn led by ~28% volume growth.
Watch business grew by 15% Y-o-Y in overseas market. We believe change in product
mix has led to 332bps Y-o-Y expansion in margins.
n ‘Others’ drag on profitability; eyewear business: potential growth driver
The others segment grew at 37% Y-o-Y, to INR 552 mn; it, however, suffered PBIT loss of
~INR 52 mn in Q3FY11. Precision and engineering (US, Europe centric) had a tough
quarter however eyewear business performed satisfactorily to reduce some of the losses.
n Outlook and valuations: Robust; maintain ‘BUY’
Jewellery business continued its robust performance in Q3FY11. Owing to better- thanexpected
numbers in watches and jewellery segments and steady growth in retail space
with the company at the end of Q3FY11 having total of 624 stores across segments, we
are now confident of further uptick due to improving consumer sentiment. However, in
the absence of low base effect in the coming quarters, such high growth rate is unlikely
to be maintained. We maintain ‘BUY ’ on the stock and rate it ‘Sector Outperformer’ on
relative return basis.
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