MOSL: TITAN COMPANY (Neutral)-Significant recovery in demand in 4QFY17-Good sales across divisions
​Titan Company: Significant recovery in demand in 4QFY17; Good sales across divisions
(TTAN IN, Mkt Cap USD6.1b, CMP INR460, TP INR485, 5% Upside, Neutral)
TTAN has released its pre-quarterly update for 4QFY17. Highlights:
Demand environment
- ​The company has mentioned that FY17 was an exceptional year, though it was struggling for growth in 1HFY17 due to low consumer demand and impact of industry strike related to imposition of excise. 2HFY17 was much better than the company had expected despite demonetization, as consumer demand recovered significantly and sales were healthy across divisions.
- It expects good sales as well as margin performance (led by gross margin expansion and cost control) in 4QFY17.
- TTAN is targeting high-teens revenue growth for FY18.
Jewelry
- ​The division had a very good quarter, led by studded jewelry activation and favorable base (studded jewelry activation had started in December 2015 last financial year, imposition of PAN requirement for transactions above INR200k, and industry strike).
- Tanishq saw retail growth that was 40% higher than the company had expected at the beginning of 4QFY17.
- Successful studded jewelry activation would lead to better gross margin.
- TTAN announced the merger of Gold Plus into Tanishq by the end of FY18, post which Gold Plus would cease to exist. It currently has 29 Gold Plus stores, which would be re-launched as Tanishq stores.
- The company added 16 Tanishq stores (60,000sf of retail space) in FY17.
- It launched, RIVAAH, a sub-brand for wedding jewelry, during the quarter.
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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