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Titan: Continues to glitter - Views on News from Equitymaster
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Titan: Continues to glitter
Aug 2, 2011

Titan Industries declared the results for the first quarter of financial year 2012 (1QFY12). The company reported 61.3% YoY growth in sales, while net profit has risen by 76.4% YoY during the quarter. Here is our analysis of the result.

Performance summary
  • Net sales grew by 61.3% YoY during 1QFY12.
  • Operating margins improved by 0.2% YoY from 8.9% in 1QFY11 to 9.1% in 1QFY12.
  • Interest charges fell by 56.5% YoY over the same quarter last year.
  • Net Profits grew by 76.4% YoY on account of lower interest costs and higher other income along with the improvement in operating margins.

    Financial performance snapshot
    (Rs m) 1QFY11 1QFY12 Change
    Net sales 12,528 20,206 61.3%
    Expenditure 11,415 18,361 60.8%
    Operating profit (EBDITA) 1,113 1,846 65.8%
    EBDITA margin (%) 8.9% 9.1%  
    Other income 80 230 187.0%
    Interest 25 11 -56.5%
    Depreciation & amortisation 82 99 21.1%
    Profit before tax 1,086 1,966 80.9%
    Extraordinary expenses - -  
    Tax 274 532 94.5%
    Profit after tax 813 1,434 76.4%
    Net profit margin (%) 6.5% 7.1%  
    No. of shares (m)   887.8  
    Diluted earnings per share (Rs)*   5.5  
    P/E (x)   41.1  
    (*trailing twelve month earnings)

    What has driven performance in 1QFY12?
    • Titan's jewellery segment grew by around 71.9% YoY during the quarter, and formed a staggering 80.7% of the company's total sales for the quarter. This is up from 75.5% in 1QFY11. The company's growing focus on stone studded jewellery and luxury segment has resulted in this outstanding performance.

    • The company's second major business segment of watches saw relatively lower growth in sales and grew by 23.2% YoY during the quarter.

    • The other businesses which include eye wear, clocks, and precision engineering components grew by 44% YoY during the last quarter.

        1QFY11 1QFY12 Change
      Watches
      Revenue (Rs m) 2,540 3,131 23.2%
      % of total revenues 20.2% 15.5%  
      EBIT margin 16.4% 14.6%  
      Jewellery
      Revenue (Rs m) 9,505 16,337 71.9%
      % of total revenues 75.5% 80.7%  
      EBIT margin 7.2% 8.9%  
      Others
      Revenue (Rs m) 538 775 44.0%
      % of total revenues 4.3% 3.8%  
      EBIT margin 3.1% -4.6%  

    • PBIT (Profit before interest and tax) margin of watches reduced by 1.8% YoY and the same of jewellery increased by 1.7% YoY as compared to same quarter last year.

    • Titan posted net profit growth of 76.4% YoY helped by lower interest costs and higher other income. This along with better operating margins helped the company in reporting the huge jump over the same quarter last year.

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