Please Share:: 
3QFY15 – revenues beat, margins miss; overall in line. Titan reported broadly in-line EBITDA and PAT. Jewelry revenue outperformance and lower-than-expected ETR failed to drive overall performance as the outperformance on jewelry revenues was low on quality and watches had an extremely disappointing quarter. We continue to like Titan’s franchise and execution but remain negative given demanding valuations and high uncertainty on jewelry volumes and gold prices. EPS estimates go up marginally as we bake in the management’s fresh outlook on tax rate. Raise TP to `370 (from `350); retain REDUCE.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15 – headline EBITDA and PAT broadly in line despite stronger-than-expected sales growth Titan reported revenues of `29.2 bn for 3QFY15, +9% yoy and 8% ahead of our expectations. Gross profit and EBITDA, however, came in 1% and 3% below our estimates respectively as overall EBITDA margins of 9.4% came in 110 bps lower than our estimate. The margin miss was driven by – (1) inferior mix of jewelry sales – studded share was lower than our expectations and coins share was higher; strong jewelry business sales performance was driven by the company’s pure gold jewelry format in southern markets – Goldplus, and (2) weak performance of the watches business where subdued sales growth drove a material miss on segmental EBIT margins. Reported PBT of `2.43 bn was 4% below our estimates; however, lower-thanexpected ETR (driven by higher production from tax-exempted Pantnagar unit) drove a 3% outperformance on PAT (`1.91 bn versus our estimated `1.86 bn). Jewelry – commendable show but low-quality outperformance Titan’s jewelry segment revenues grew 11% yoy to `23.5 bn, 14% ahead of our expectations. Jewelry segment margins, however, were 53 bps lower than our expectations despite the logical leverage benefits of higher sales. Weak margin performance, as discussed above, was a reflection of weaker-than-expected sales mix. Another key aspect why we are calling the outperformance low-quality – secondary sales for the segment were flat qoq versus the company’s reported (primary) sales growth of 11% yoy. We note that for the company’s L1 and L2 formats, primary and secondary sales numbers are the same. L3 stores are the only source of difference between primary and secondary sales and to that extent, the 11%pt differential between primary and secondary sales appears very high to us. That said, even a flat secondary sales yoy performance is commendable, in its own right. We note that the company did not have any revenues pertaining to deposit schemes like Golden Harvest in 3QFY15. Marginally tweak estimates; retain REDUCE Our EPS estimates go up marginally as we bake in management’s fresh outlook on tax rate. Raise TP to `370 (from `350) and retain REDUCE.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
3QFY15 – revenues beat, margins miss; overall in line. Titan reported broadly in-line EBITDA and PAT. Jewelry revenue outperformance and lower-than-expected ETR failed to drive overall performance as the outperformance on jewelry revenues was low on quality and watches had an extremely disappointing quarter. We continue to like Titan’s franchise and execution but remain negative given demanding valuations and high uncertainty on jewelry volumes and gold prices. EPS estimates go up marginally as we bake in the management’s fresh outlook on tax rate. Raise TP to `370 (from `350); retain REDUCE.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
3QFY15 – headline EBITDA and PAT broadly in line despite stronger-than-expected sales growth Titan reported revenues of `29.2 bn for 3QFY15, +9% yoy and 8% ahead of our expectations. Gross profit and EBITDA, however, came in 1% and 3% below our estimates respectively as overall EBITDA margins of 9.4% came in 110 bps lower than our estimate. The margin miss was driven by – (1) inferior mix of jewelry sales – studded share was lower than our expectations and coins share was higher; strong jewelry business sales performance was driven by the company’s pure gold jewelry format in southern markets – Goldplus, and (2) weak performance of the watches business where subdued sales growth drove a material miss on segmental EBIT margins. Reported PBT of `2.43 bn was 4% below our estimates; however, lower-thanexpected ETR (driven by higher production from tax-exempted Pantnagar unit) drove a 3% outperformance on PAT (`1.91 bn versus our estimated `1.86 bn). Jewelry – commendable show but low-quality outperformance Titan’s jewelry segment revenues grew 11% yoy to `23.5 bn, 14% ahead of our expectations. Jewelry segment margins, however, were 53 bps lower than our expectations despite the logical leverage benefits of higher sales. Weak margin performance, as discussed above, was a reflection of weaker-than-expected sales mix. Another key aspect why we are calling the outperformance low-quality – secondary sales for the segment were flat qoq versus the company’s reported (primary) sales growth of 11% yoy. We note that for the company’s L1 and L2 formats, primary and secondary sales numbers are the same. L3 stores are the only source of difference between primary and secondary sales and to that extent, the 11%pt differential between primary and secondary sales appears very high to us. That said, even a flat secondary sales yoy performance is commendable, in its own right. We note that the company did not have any revenues pertaining to deposit schemes like Golden Harvest in 3QFY15. Marginally tweak estimates; retain REDUCE Our EPS estimates go up marginally as we bake in management’s fresh outlook on tax rate. Raise TP to `370 (from `350) and retain REDUCE.
LINK
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28012015po.pdf
No comments:
Post a Comment