Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Titan reported Net Sales, EBITDA and PAT growth of 36%, 15% and 20%
respectively for 2Q FY12. While revenue was broadly in line with
estimates, net earnings came in below our and consensus expectations.
Much of the earnings disappointment was on account of weak margin
performance of watch division. Management was cautious on the nearterm
outlook for demand for watches and jewelry and guided for subdued
margins for watch division over medium term. Maintain Underweight.
Jewelry – Subdued volume growth; stable margins: The jewelry
division registered 45% y/y revenue growth with volume growth
slowing down to 3% during 2Q FY12 (40% in Q1). LTL value sales
growth for Tanishq and Goldplus was 31% and 49% respectively driven
by higher gold/diamond prices. LTL volume declined -3% y/y.
However higher pricing and studded jewelry share at 28% led to stable
EBIT margins of 9.2% (+10bp y/y).
Watches – Weak performance: The watch segment registered sales
growth of 16% y/y led by volume growth of 19% and negative price/mix
growth of -3%. Faster growth for low-price brands – Zoop, Sonata and
Fastrack – had an adverse impact on realization growth. Besides, higher
input costs (aggravated by rupee depreciation) led to gross margin
erosion of 400bp y/y. Investments in formats such as Helios and
Fastrack further weighed on EBIT margins which declined 540bp y/y.
Management call takeaways: 1) Economic slowdown along with
volatile gold prices remains a concern, particularly for impulse
purchases. 2) Possible impact on volume growth in the wake of recent
price increases (6-7%) in watch division. 3) Current festive sales have
started on a slow note (on volume offtake), though there is optimism
about a revival going forward. 4) PBT breakeven expected for eyewear
division during the current year. 5) Precision Engineering’s revenue
growth should recover in 2H as pending orders are completed. 6) Titan’s
test launch of leather accessories (e.g. bags, wallets) had an encouraging
response and the company may launch these nationally at a later stage. 7)
Re-classification of cash under segment assets (vs earlier at corporate
level) implying positive capital employed for jewelry division now.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Titan reported Net Sales, EBITDA and PAT growth of 36%, 15% and 20%
respectively for 2Q FY12. While revenue was broadly in line with
estimates, net earnings came in below our and consensus expectations.
Much of the earnings disappointment was on account of weak margin
performance of watch division. Management was cautious on the nearterm
outlook for demand for watches and jewelry and guided for subdued
margins for watch division over medium term. Maintain Underweight.
Jewelry – Subdued volume growth; stable margins: The jewelry
division registered 45% y/y revenue growth with volume growth
slowing down to 3% during 2Q FY12 (40% in Q1). LTL value sales
growth for Tanishq and Goldplus was 31% and 49% respectively driven
by higher gold/diamond prices. LTL volume declined -3% y/y.
However higher pricing and studded jewelry share at 28% led to stable
EBIT margins of 9.2% (+10bp y/y).
Watches – Weak performance: The watch segment registered sales
growth of 16% y/y led by volume growth of 19% and negative price/mix
growth of -3%. Faster growth for low-price brands – Zoop, Sonata and
Fastrack – had an adverse impact on realization growth. Besides, higher
input costs (aggravated by rupee depreciation) led to gross margin
erosion of 400bp y/y. Investments in formats such as Helios and
Fastrack further weighed on EBIT margins which declined 540bp y/y.
Management call takeaways: 1) Economic slowdown along with
volatile gold prices remains a concern, particularly for impulse
purchases. 2) Possible impact on volume growth in the wake of recent
price increases (6-7%) in watch division. 3) Current festive sales have
started on a slow note (on volume offtake), though there is optimism
about a revival going forward. 4) PBT breakeven expected for eyewear
division during the current year. 5) Precision Engineering’s revenue
growth should recover in 2H as pending orders are completed. 6) Titan’s
test launch of leather accessories (e.g. bags, wallets) had an encouraging
response and the company may launch these nationally at a later stage. 7)
Re-classification of cash under segment assets (vs earlier at corporate
level) implying positive capital employed for jewelry division now.
No comments:
Post a Comment