X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Titan: VRS subdues profits - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 30, 2004

    Titan: VRS subdues profits

    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.

    (Rs m) 3QFY03 3QFY04 Change 9mFY03 9mFY04 Change
    Net sales 2,128 2,885 35.6% 4,933 6,249 26.7%
    Other income 6 4 -39.3% 13 14 6.7%
    Expenditure 1,836 2,642 43.9% 4,362 5,663 29.8%
    Operating profit (EBDITA) 291 243 -16.5% 571 585 2.5%
    Operating profit margin (%) 13.7% 8.4%   11.6% 9.4%  
    Interest 112 92 -17.5% 328 303 -7.5%
    Depreciation 121 66 -45.7% 281 196 -30.4%
    Profit before tax 64 89 38.0% (24) 101 -
    Extraordinary items (12) (24) - (34) (72) -
    Tax 7 35 441.5% (23) 12 -
    Profit after tax/(loss) 46 30 -34.6% (36) 17 -
    Net profit margin (%) 2.1% 1.0%   -0.7% 0.3%  
    No. of shares (m) 42.3 42.3   42.3 42.3  
    Diluted earnings per share (Rs)* 4.3 2.8   (1.1) 0.5  
    P/E ratio (x)         210.1  
    (* annualised)            

    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.

    Segmental break-upů
    (Rs m) 3QFY03 3QFY04 Change 9mFY02 9mFY03 Change
    Revenues - watches 1,240 1,255 1.2% 3,072 3,503 14.1%
    PBIT margin 10.2% 5.7%   6.6% 4.3%  
    Revenues - jewellery 1,052 1,766 67.9% 2,328 3,217 38.2%
    PBIT margin 3.2% 4.9%   2.7% 5.4%  
    Overall EBIT margin 7.0% 5.2%   4.9% 4.9%  

    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.

    Cost break-upů
    (Rs m) 3QFY03 3QFY04 Change 9mFY02 9mFY03 Change
    Raw material 1,384 1,964 41.9% 2,988 3,887 30.1%
    % sales 65.0% 68.1%   60.6% 62.2%  
    Staff cost 194 224 15.7% 583 620 6.5%
    % sales 9.1% 7.8%   11.8% 9.9%  
    Advertising expenses 134 217 62.2% 314 485 54.5%
    % sales 6.3% 7.5%   6.4% 7.8%  
    Others 125 237 90.0% 478 672 40.4%
    % sales 5.9% 8.2%   9.7% 10.7%  

    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.

     

     

    Equitymaster requests your view! Post a comment on "Titan: VRS subdues profits". Click here!

      
     

    More Views on News

    Titan: Jewellery Business Lights up the Quarter (Quarterly Results Update - Detailed)

    Aug 10, 2017

    However, growth at these levels are unlikely to be sustainable.

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Titan: Beating the Demonetisation Blues (Quarterly Results Update - Detailed)

    Feb 14, 2017

    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: Margin Improvement Saves the Day (Quarterly Results Update - Detailed)

    Nov 16, 2016

    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.

    Titan: High Gold Prices Spoil the Show (Quarterly Results Update - Detailed)

    Aug 9, 2016

    Titan Industries declared its results for the first quarter of financial year 2017 (1QFY17). The company reported 3.3% YoY increase in sales, while net profit fell by 16.3% YoY during the quarter.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    TITAN COMPANY SHARE PRICE


    Aug 22, 2017 (Close)

    TRACK TITAN COMPANY

    • Track your investment in TITAN COMPANY with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    TITAN COMPANY - GOME ELECTRICAL COMPARISON

    Compare Company With Charts

    COMPARE TITAN COMPANY WITH

    MARKET STATS