MOSL: TITAN COMPANY (Buy)-Jewellery market share continues expanding; 2QFY19 off to a good start
Titan Company: Jewellery market share continues expanding; 2QFY19 off to a good start
(TTAN IN, Mkt Cap USD11.9b, CMP INR918, TP INR1130, 23% Upside, Buy)
- 1QFY19 reported consol. revenue (incl. other operating income) was up 9.4% YoY to INR44.5b (est. of INR42.6b). EBITDA grew 32.3% YoY to INR4.8b (est. of INR4.3b) and recurring PAT increased 31.9% YoY to INR3.3b (est. of INR3.0b).
- segmental performance: (a) Reported Jewelry sales rose 6.3% YoY to INR36.4b, with segment margin up 110bp YoY to 10.5%. (b) Watches sales grew 15% YoY to INR6b, with a sharp EBIT margin improvement of 900bp to 16.7%.
- Gross margin expanded 90bp YoY to 27.4%. Other expenses were down 180bp YoY to 7.6% of sales, while adspend was up 50bp YoY to 3.5% and staff costs increased 30bp YoY to 5.4%. Thus, EBITDA margin expanded 190bp YoY to 10.8% (est. of 10.2%) in 1QFY19.
- Concall highlights: (1) Jewellery business continued to gain market share in 1QFY19. (2) Jewellery growth in July was 70%; adjusted for advancement, growth would be ~40%. (3) 1QFY19 Jewellery sales miss v/s estimate of 14-15% means that full-year growth may be ~22-23% based on its earlier target for the remaining nine months.
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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