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Strong growth momentum; PAT CAGR of 21%…
Titan Industries’ Q4FY11 revenues were ahead of our estimates while
EBITDA and PAT were lower than our estimates. Titan’s topline, EBITDA
and PAT stood at | 1,777.6 (up 35.6% YoY), | 106.7 crore (up 1.7% YoY)
and | 83.8 crore (up 63.5% YoY), respectively. Positive consumer
sentiment was reflected in the consistent double digit growth in the
jewellery (up 39% YoY) and watches (up 17% YoY) segment. The EBITDA
margin was impacted by the lower margin in the watch segment (EBIT of
2.9% in Q4FY11 vs. 7.7% in Q4FY10) on account of a one-time special
bonus given to all employees. Consequently, the blended EBITDA margin
stood at 6.0% in Q4FY11 as against 8.0% in Q4FY10 and 10% in Q3FY11.
However, higher other income and lower interest and depreciation outgo
led to a 63.5% YoY PAT growth. For the year ended March 2011,
revenues, operating profit and PAT grew 39.5%, 48.2% and 71.9%,
respectively, to | 6,521 crore, | 586 crore and | 430 crore, respectively.
Jewellery segment continues to shine
In Q4FY11, the jewellery business grew 39% YoY to | 1,373.3 crore
on the back of healthy demand. The EBIT margin in the jewellery
segment expanded 80 bps YoY to 8.7%. On a full year basis also,
the segment reported a healthy 43.5% growth with a 100 bps EBIT
margin expansion to 8.5% on the back of increased gold prices.
Retail expansion continues
During FY11, Titan added 122 retail stores taking the total number of
stores to 665 covering a total space of 8,10,000 sq. ft.
Valuation
We believe that Titan’s robust growth in both the watches and jewellery
segment will continue, going forward. Also, the retail expansion plans of
the company will further fuel growth. During FY11-13E, we expect a 22%
and 21% CAGR in topline and bottomline growth, respectively. We
continue to maintain a HOLD rating on Titan Industries with a revised
target price of | 4,269 (based on 30x FY13E EPS of | 142.3). Investors
who invested at ~ | 3,500 levels can also continue to HOLD the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong growth momentum; PAT CAGR of 21%…
Titan Industries’ Q4FY11 revenues were ahead of our estimates while
EBITDA and PAT were lower than our estimates. Titan’s topline, EBITDA
and PAT stood at | 1,777.6 (up 35.6% YoY), | 106.7 crore (up 1.7% YoY)
and | 83.8 crore (up 63.5% YoY), respectively. Positive consumer
sentiment was reflected in the consistent double digit growth in the
jewellery (up 39% YoY) and watches (up 17% YoY) segment. The EBITDA
margin was impacted by the lower margin in the watch segment (EBIT of
2.9% in Q4FY11 vs. 7.7% in Q4FY10) on account of a one-time special
bonus given to all employees. Consequently, the blended EBITDA margin
stood at 6.0% in Q4FY11 as against 8.0% in Q4FY10 and 10% in Q3FY11.
However, higher other income and lower interest and depreciation outgo
led to a 63.5% YoY PAT growth. For the year ended March 2011,
revenues, operating profit and PAT grew 39.5%, 48.2% and 71.9%,
respectively, to | 6,521 crore, | 586 crore and | 430 crore, respectively.
Jewellery segment continues to shine
In Q4FY11, the jewellery business grew 39% YoY to | 1,373.3 crore
on the back of healthy demand. The EBIT margin in the jewellery
segment expanded 80 bps YoY to 8.7%. On a full year basis also,
the segment reported a healthy 43.5% growth with a 100 bps EBIT
margin expansion to 8.5% on the back of increased gold prices.
Retail expansion continues
During FY11, Titan added 122 retail stores taking the total number of
stores to 665 covering a total space of 8,10,000 sq. ft.
Valuation
We believe that Titan’s robust growth in both the watches and jewellery
segment will continue, going forward. Also, the retail expansion plans of
the company will further fuel growth. During FY11-13E, we expect a 22%
and 21% CAGR in topline and bottomline growth, respectively. We
continue to maintain a HOLD rating on Titan Industries with a revised
target price of | 4,269 (based on 30x FY13E EPS of | 142.3). Investors
who invested at ~ | 3,500 levels can also continue to HOLD the stock.
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