Titan, the market leader in the organised watch and jewellery segment, has posted impressive results for the third quarter ended December 2003. But as has been the case in the past, while topline growth is encouraging, higher charges towards voluntary retirement scheme (VRS), higher marketing related costs and low interest coverage continues to have a negative impact on the company's net margins.
Operating profit (EBDITA)
Operating profit margin (%)
Profit before tax
Profit after tax/(loss)
Net profit margin (%)
No. of shares (m)
Diluted earnings per share (Rs)*
P/E ratio (x)
Net sales have risen at a faster rate when compared to previous quarter by 36% in 3QFY04. This is primarily on account of the festive season wherein demand for watches and jewellery tends to be on the higher side as compared to the first half of a year. As far as segment-wise performance is concerned, while watches have shown marginal growth in 3QFY04, it is the performance of the jewellery business that has enabled Titan to post higher revenue growth. As we have been maintaining throughout, while the company has a leadership position with a strong brand in the organised watches market, competition is fast rising. The EBIT margin is below our estimate of 9% for FY04.
Revenues - watches
Revenues - jewellery
Overall EBIT margin
As far as margins are concerned, the company's performance at the segmental level is above our expectations, especially on the jewellery side. We have excluded VRS related expenses from the operating expenses and classified under extraordinary items to reflect the actual operating level performance. Overall, while the company's performance at the net sales level is in line with our FY04 estimates, the jewellery division has posted higher EBIT margins. This could be on account of favorable gold prices. Nevertheless, as the contribution from jewellery division is on the rise, so is the raw material cost as a percentage of sales.
At the net profit level, we had not factored in the VRS related expenditure in our estimates. Excluding this impact, our estimates for FY04 are in line with the company's 9mFY04 performance. The stock is currently trading at Rs 112 implying a P/E multiple of 44.6x our FY04 estimated earnings. While valuations seem to be on the higher side, we expect the company to benefit from restructuring of its debt, unlocking of cash from working capital and improvement in margins over the long term. To that extent, there is scope for higher growth in profitability in the next two to three years. However, the risk associated with the same is also on the higher side.
Titan Industries declared its results for the third quarter of financial year 2017 (3QFY17). While topline growth was 14.7% YoY, net profit grew by 13.1% YoY during the quarter. Here is our analysis of the results.
Titan Industries declared its results for the second quarter of financial year 2017 (2QFY17). While topline growth was flat, net profit grew by 23.5% YoY during the quarter. Here is our analysis of the results.
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