MOSL: TITAN COMPANY (Buy)-Results muted on high October base, Outlook remains buoyant
Titan Company: Results muted on high October base, Outlook remains buoyant
(TTAN IN, Mkt Cap USD11.6b, CMP INR831, TP INR990, 19% Upside, Buy)
- Titan’s (TTAN) 3QFY18 reported revenue grew 8.3% YoY (est. of +20%) to INR42.7b. EBITDA rose 21.2% YoY to INR4.22b (est. of INR4.40b), while recurring PAT increased 21% YoY to INR2.82b (est. of INR 3.26b).
- Consolidated segmental performance: a) Jewelry sales were up 8% YoY to INR35.7b (grammage grew 6% YoY), while the segment margin expanded 10bp YoY to 10.3% in 3QFY18. b) Watches sales grew 4.5% YoY to INR5.4b, with an EBIT margin improvement of 250bp YoY to 12.8%.
- Gross margin expanded 130bp YoY to 24.8%. Adspends grew by 30bp and staff cost by 10bp YoY, while other expenses declined by 20bp YoY. EBITDA margin, thus, expanded 110bp YoY to 9.9% in 3QFY18. Reclassification of cost led to lower other expenses in the quarter.
- 9MFY18 consolidated performance: Sales, EBITDA and adj. PAT grew 24.7%, 34.4% and 30.4% YoY, respectively. Jewelry sales rose 29.6% YoY, with EBIT margin expansion of 70bp YoY.
- Concall highlights: 1) Management maintained 25% growth guidance for the jewelry segment for FY18. 2) Targeting 17-18% same-store sales growth (SSSG) of the 25%-odd sales growth targeted in jewellery.
Titan is engaged in the watch division where Co. manufactures and sells a variety of watches with varying price range within India and overseas; in the jewelry division where Co. works through Tanishq and Zoya. Tanishq has a range of jewelry studded with diamonds or coloured gems in 18 kt gold, 22 kt pure gold and platinum; and Zoya is a chain of luxury jewelry boutiques; in the eyewear division where Titan Eye+ retails products which showcase contemporary designs, coupled with optical exams with Sankara Nethralaya; and in the precision engineering division, Co. sells its components globally and helps build machinery.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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