MOSL: TITAN COMPANY (Neutral)-Consecutive quarter of sharp Jewellery growth, advancement in buying seen
​Titan Company: Consecutive quarter of sharp Jewellery growth, advancement in buying seen
(TTAN IN, Mkt Cap USD7.8b, CMP INR558, TP INR565, 1% Upside, Neutral)
- Titan’s 1QFY18 revenue rose 42.2% YoY (est. of +25%) to IN39.9b. EBITDA grew by 27.2% YoY to INR3.6b and recurring PAT by 13.9% YoY to INR2.5b (est. of INR2.3b).
- Gross margin shrunk 460bp YoY to 24.9%, with EBITDA margin contracting 110bp YoY (est. of -100bp) to 9.2% in 1QFY18. Staff cost declined by 170bp YoY to 5.3% of sales, adspend by 70bp YoY to 3% of sales and other expenses by 110bp YoY to 7.5% of sales, partially offsetting gross margin contraction.
- Jewelry sales were up 56% YoY to INR33.5b (51% LTL growth), with segment margin expanding 20bp YoY to 9.6%. Gold tonnage increased 49% YoY in 1QFY18. Exceptional jewelry growth in the quarter was led by good Akshaya Tritiya period, successful gold exchange program, advancement of sales due to GST implementation, and favorable base due to a strike by federation on excise imposition. Watches sales grew 2% YoY (5% volume growth) to INR5.1b, with 700bp EBIT margin expansion to 7.8%. Eyewear sales were flat at INR1.1b. In 1QFY18, the company added 31 stores with retail space of 31k sq. ft.
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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