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Titan Industries: Buy; PT Rs5000 (Analyst –
Sunita Sachdev)
Discretionary consumption growing strong despite price headwinds
Price inflation; volume growth key metric: Over the last 2-3 months while
gold prices are up ~8% but the prices of diamonds are up ~60-70%. The
~30% of jewellery sales that is diamond jewellery has seen the highest price
inflation. The risk is on slowing diamond jewellery sales. Titan passes on all
diamond cost increases; Q1FY12E should see a margin expansion due to
inventory gain from diamond stocks.
Margin and growth targets; in line with our estimates: Over the next 2-3
years, Titan would like to expand EBIT margins from the current 8.5% to
10% levels. We have built in 9.3% EBIT margins for FY13-14E. We have
built in 16% and 18% volume growth in the watch and jewellery segments
(FY12) in our estimates which are in line with the company's benchmarked
expectations.
Expansion, growth strategies: Apart from the retail chain expansion across
store openings in watches, jewellery and optics. Titan is opening Helios
stores - retailing mid-luxury watches and Tanishq landmark stares to drive
market leadership in the large cities in India. Titan may also look for an
acquisition of a watch brand to augment the watch business as a proportion
of total sales.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Titan Industries: Buy; PT Rs5000 (Analyst –
Sunita Sachdev)
Discretionary consumption growing strong despite price headwinds
Price inflation; volume growth key metric: Over the last 2-3 months while
gold prices are up ~8% but the prices of diamonds are up ~60-70%. The
~30% of jewellery sales that is diamond jewellery has seen the highest price
inflation. The risk is on slowing diamond jewellery sales. Titan passes on all
diamond cost increases; Q1FY12E should see a margin expansion due to
inventory gain from diamond stocks.
Margin and growth targets; in line with our estimates: Over the next 2-3
years, Titan would like to expand EBIT margins from the current 8.5% to
10% levels. We have built in 9.3% EBIT margins for FY13-14E. We have
built in 16% and 18% volume growth in the watch and jewellery segments
(FY12) in our estimates which are in line with the company's benchmarked
expectations.
Expansion, growth strategies: Apart from the retail chain expansion across
store openings in watches, jewellery and optics. Titan is opening Helios
stores - retailing mid-luxury watches and Tanishq landmark stares to drive
market leadership in the large cities in India. Titan may also look for an
acquisition of a watch brand to augment the watch business as a proportion
of total sales.
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