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: Dragging diversification - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 20, 2001

    Titan: Dragging diversification

    Titan Industries has reported a 35% growth in net profits for the third quarter ended 31st December 2000. Though the company's operating profits declined by 10%, lower interest and depreciation costs have boosted net profits to Rs 35 m.

    (Rs m) 3QFY00 3QFY01 Change
    Sales 1,480 1,603 8.3%
    Other Income 14 3 -76.8%
    Expenditure 1,260 1,405 11.5%
    Operating Profit (EBDIT) 219 197 -10.0%
    Operating Profit Margin (%) 14.8% 12.3%  
    Interest 159 127 -20.4%
    Depreciation 55 48 -11.7%
    Profit before Tax 20 26 30.2%
    Tax 2 2 -4.3%
    Profit after Tax/(Loss) 18 24 34.7%
    Net profit margin (%) 1.2% 1.5%  
    No. of Shares (eoy) (m) 42.3 42.3  
    Diluted number of shares 42.3 42.3  
    Earnings per share* 1.7 2.2  

    Sales for 3QFY01 has gone up marginally by 8% to Rs 1,603 m. But, for the first nine months of the current year, sales have increased by 13% to Rs 4,475 m. Higher raw material (up 8%), staff (up 6%) and advertisement expenditure (up 19%) have resulted in operating margins dropping to 12% from 16% for the first nine months of the current year. The company has redeemed a part of its preference shares during December 2000 (dividend rate of 10.5%) and has re-issued the same at 9.5% in January 2001. Thus, lower cost of funds has resulted in lower interest outflow during first nine months of the current year.

    Considering the first nine months performance of the company, net profit has gone up significantly by 91% to Rs 132 m. However, Titan made profits to the extent Rs 97 m through sale of equity shares of RDI Printing & Publishing Ltd. in June 2000. Excluding this extraordinary income, net profit has actually declined by 50% to Rs 35 m.

    Reportedly, the company has plans to venture into manufacturing of high precision components used in aerospace and medical equipment industries. Though these areas are highly lucrative segments, it is not sure whether Titan has the necessary technical expertise in these fields. High precision component manufacturing also nessessitates substantial capital expenditure for setting up of adequate research laboratories.

    Already the company's venture into branded jewellery segment has been a drag on the company (due to higher raw material and distribution costs). Added to this, the core business of the company i.e. watch manufacturing is a working capital intensive business (net working capital to sales of around 65%). Hence, further diversifications have raised apprehensions about the profitability and viability of these new ventures.

    The stock is trading at Rs 81 at a P/E multiple of 19.5x the annualised nine months earnings. On the annualised sales of Rs 5,967 m, market capitalisation to sales works out to 0.6 times (market capitalisation is Rs 3,424 m). In light of the poor operating performance, the stock's valuation seem to be stuck in a time warp.



    Equitymaster requests your view! Post a comment on "Titan: Dragging diversification". 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 Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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?

    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


    Aug 21, 2017 (Close)


    • 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


    Compare Company With Charts