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Titan Industries Ltd
1QF12 - 72% growth in
Jewellery, 23% in Watches
1QF12 results underpin our view that Titan is the
best play on India’s income and demographic story.
Investors will continue to be surprised by the ability
of the company to deliver strong volume growth
and product mix driven margin expansion.
Quick Comment – Strong Performance: We expect
the stock to respond positively on the back of this result.
Titan reported 1QF12 results with revenues +61%,
operating profits +66% and adjusted net profit of 76%.
This compares favorably with our estimates of 31%,
34% and 34% growth, respectively. The beat was driven
by strong performance across all business segments.
1QF12 results highlights: (1) Jewellery business
revenues increased by 72% YoY. Our back of the
envelope calculations suggest that same store volume
growth for the quarter was ~25%. (2) Jewellery
operating margins expanded by 170bps to 8.9%, driven
by a combination of diamond inventory gains and better
absorption of fixed costs offset by increased excise not
passed through, we believe. (3) 23% revenue growth in
the watch segment for Titan was above our expectation
of 17% growth. (4) The only negative in the otherwise
solid results was Watch segment EBIT growth of 10%. In
our view, margins were impacted by adverse product
mix (Sonata brand grew faster than Titan and Fastrack).
(5) As expected, Others segment reported a loss this
quarter, as pace of new store openings increased.
Losses in this segment will likely continue over the next
few quarters. (6) Capital employed in jewellery
continues to be negative driven by strong traction in the
consumer credit (‘golden harvest’) scheme, which
accounts for ~12% of jewellery revenues, we believe.
Current low volatility in gold prices is supportive of
further improvement in capital efficiency, we believe,
and is a key re-rating driver.
Upward earnings revisions likely: We expect Titan, a
large beneficiary of improving consumer disposable
income, to enjoy earnings upgrades as the Street factors
in faster growth across business segments
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Titan Industries Ltd
1QF12 - 72% growth in
Jewellery, 23% in Watches
1QF12 results underpin our view that Titan is the
best play on India’s income and demographic story.
Investors will continue to be surprised by the ability
of the company to deliver strong volume growth
and product mix driven margin expansion.
Quick Comment – Strong Performance: We expect
the stock to respond positively on the back of this result.
Titan reported 1QF12 results with revenues +61%,
operating profits +66% and adjusted net profit of 76%.
This compares favorably with our estimates of 31%,
34% and 34% growth, respectively. The beat was driven
by strong performance across all business segments.
1QF12 results highlights: (1) Jewellery business
revenues increased by 72% YoY. Our back of the
envelope calculations suggest that same store volume
growth for the quarter was ~25%. (2) Jewellery
operating margins expanded by 170bps to 8.9%, driven
by a combination of diamond inventory gains and better
absorption of fixed costs offset by increased excise not
passed through, we believe. (3) 23% revenue growth in
the watch segment for Titan was above our expectation
of 17% growth. (4) The only negative in the otherwise
solid results was Watch segment EBIT growth of 10%. In
our view, margins were impacted by adverse product
mix (Sonata brand grew faster than Titan and Fastrack).
(5) As expected, Others segment reported a loss this
quarter, as pace of new store openings increased.
Losses in this segment will likely continue over the next
few quarters. (6) Capital employed in jewellery
continues to be negative driven by strong traction in the
consumer credit (‘golden harvest’) scheme, which
accounts for ~12% of jewellery revenues, we believe.
Current low volatility in gold prices is supportive of
further improvement in capital efficiency, we believe,
and is a key re-rating driver.
Upward earnings revisions likely: We expect Titan, a
large beneficiary of improving consumer disposable
income, to enjoy earnings upgrades as the Street factors
in faster growth across business segments
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