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E v i d e n c e o f s l o w d o w n i n d e m a n d …
Titan Industries’ (Titan) Q3FY12 results were broadly in line with our
estimates. As expected, the slowdown in revenue and profitability growth
has started to surface due to the dual impact of weaker consumer
sentiment and higher base effect. Titan’s Q3FY12 revenues increased by
24.8% YoY to | 2,440.1 crore, marginally lower than our estimate of
| 2,509.5 crore. The jewellery and watches segment revenues grew by
25.2% and 17.2% YoY to | 1,985.9 crore and | 383.1 crore, respectively.
The EBITDA margin slipped 125 bps YoY to 8.7% due to weaker margins
in both the jewellery and watch segment. Despite a weak operating
performance, PAT increased by 16.4% YoY to | 163.9 crore (I-direct
estimate: | 170.6 crore) led by higher other income.
ƒ Segmental performance
Jewellery: The jewellery segment witnessed 25.2% YoY growth to
| 1,985.9 crore, which was primarily due to increase in gold prices.
The impact of the slowdown in consumer demand was visible as the
jewellery segment witnessed volume de-growth of 5%. However,
for the nine months ended December 2011, the segment witnessed
revenue growth of 43.6% YoY to | 5,264.5 crore (9% volume
growth).
Watches: The watches segment grew 17.2% YoY to | 383.1 crore,
led by 11% volume growth. The company had also taken price hikes
across all categories to pass on the impact of higher raw material
prices. For the nine months ended December 2011, the segment
witnessed revenue growth of 18.6% YoY to | 1,115.9 crore (16%
volume growth).
V a l u a t i o n
While Titan’s numbers were broadly in line with our and Street estimates,
the pressure of lower volume growth and the lower operating margin
remains. Accordingly, we have revised our operating margin estimates
downwards. We believe the current valuations discount the said
concerns. At the CMP, the stock is trading at 30.0x and 26.1x its FY12E
and FY13E EPS of | 6.5 and | 7.5, respectively. We continue to maintain a
BUY rating on the stock with a revised target price of | 225 (30x FY13E
EPS of | 7.5)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
E v i d e n c e o f s l o w d o w n i n d e m a n d …
Titan Industries’ (Titan) Q3FY12 results were broadly in line with our
estimates. As expected, the slowdown in revenue and profitability growth
has started to surface due to the dual impact of weaker consumer
sentiment and higher base effect. Titan’s Q3FY12 revenues increased by
24.8% YoY to | 2,440.1 crore, marginally lower than our estimate of
| 2,509.5 crore. The jewellery and watches segment revenues grew by
25.2% and 17.2% YoY to | 1,985.9 crore and | 383.1 crore, respectively.
The EBITDA margin slipped 125 bps YoY to 8.7% due to weaker margins
in both the jewellery and watch segment. Despite a weak operating
performance, PAT increased by 16.4% YoY to | 163.9 crore (I-direct
estimate: | 170.6 crore) led by higher other income.
ƒ Segmental performance
Jewellery: The jewellery segment witnessed 25.2% YoY growth to
| 1,985.9 crore, which was primarily due to increase in gold prices.
The impact of the slowdown in consumer demand was visible as the
jewellery segment witnessed volume de-growth of 5%. However,
for the nine months ended December 2011, the segment witnessed
revenue growth of 43.6% YoY to | 5,264.5 crore (9% volume
growth).
Watches: The watches segment grew 17.2% YoY to | 383.1 crore,
led by 11% volume growth. The company had also taken price hikes
across all categories to pass on the impact of higher raw material
prices. For the nine months ended December 2011, the segment
witnessed revenue growth of 18.6% YoY to | 1,115.9 crore (16%
volume growth).
V a l u a t i o n
While Titan’s numbers were broadly in line with our and Street estimates,
the pressure of lower volume growth and the lower operating margin
remains. Accordingly, we have revised our operating margin estimates
downwards. We believe the current valuations discount the said
concerns. At the CMP, the stock is trading at 30.0x and 26.1x its FY12E
and FY13E EPS of | 6.5 and | 7.5, respectively. We continue to maintain a
BUY rating on the stock with a revised target price of | 225 (30x FY13E
EPS of | 7.5)
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