MOSL: TITAN COMPANY (Buy)-Continued robust performance sans one-offs-outlook buoyant too
Titan Company: Continued robust performance sans one-offs; outlook buoyant too
(TTAN IN, Mkt Cap USD13.9b, CMP INR1088, TP INR1280, 18% Upside, Buy)
- 4QFY19 reported consol. revenue grew 19% YoY to IN48.9b (our estimate: INR47.4b). EBITDA increased by just 3% YoY to INR4.5b (our estimate: INR5.4b), while recurring PAT grew 11.6% YoY to INR3.5b (our estimate: INR3.9b). EBITDA margin shrank 140bp YoY to 9.2% (our estimate: 11.3%).
- However, adjusted for one-offs - (a) IL&FS exposure provision (now completely written-off after INR460m provision in 4QFY19), (b) the transient inventory valuation impact of INR370 (to be reversed in 1QFY20) and (c) the one-off ex-gratia payment of INR350m - EBITDA is up by 29.9% YoY (margin up 100bp YoY to 11.6%, 30bp ahead of estimates) and PAT by 29% YoY. Since these costs are not extraordinary, we continue using the reported numbers in our model. However, the above adjustments indicate that the underlying performance is far healthier than what the numbers are reflecting.
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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