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Titan: Margin Improvement Saves the Day - Views on News from Equitymaster
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Titan: Margin Improvement Saves the Day
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.

Performance summary
  • Net sales growth was flat during the quarter.
  • Operating profit grew by 42.3% YoY due to operating expenses growing at a pace lower than the growth in revenues. As a result, EBITDA margin grew to 9.8% YoY during the quarter.
  • Interest expenses for the company grew by 34.4% YoY.
  • Profit after tax grew by 23.5% YoY during the quarter.

    Financial performance snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Net sales 26,625 26,598 -0.1% 53,553 54,661 2.1%
    Expenditure 24,796 23,994 -3.2% 49,727 49,299 -0.9%
    Operating profit (EBDITA) 1,830 2,604 42.3% 3,826 5,363 40.2%
    EBDITA margin (%) 6.9% 9.8% 7.1% 9.8%
    Other income 326 277 -15.2% 721 573 -20.5%
    Interest 87 117 34.4% 205 205 -0.2%
    Depreciation & amortisation 240 260 8.2% 469 520 11.0%
    Exceptional items 0 -30 0 -999
    Profit before tax 1,829 2,474 35.3% 3,873 4,212 8.7%
    Tax 365 667 82.5% 895 1,137 27.1%
    Profit after tax 1,464 1,808 23.5% 2,978 3,075 3.2%
    Other comprehensive income -44 886 -104 234
    Total comprehensive income 1,420 2,694 89.7% 2,874 3,309 15.1%
    Net profit margin (%) 5.5% 6.8% 5.6% 5.6%
    No. of shares (m) 887.8
    Reported earnings per share (Rs)* 8.1
    P/E (x)* 45.4

    (*trailing twelve months)


    Standalone segment wise break up
    2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Watches
    Revenue (Rs m) 5,524 5,237 -5.2% 10,412 10,234 -1.7%
    % of total revenues 20.6% 19.5% 19.3% 18.6%
    EBIT margin 15.1% 12.3% 12.6% 7.2%
    Jewellery
    Revenue (Rs m) 19,827 19,875 0.2% 40,558 41,381 2.0%
    % of total revenues 73.8% 74.2% 75.1% 75.1%
    EBIT margin 6.1% 11.0% 7.4% 10.2%
    Eyewear
    Revenue (Rs m) 893 952 6.6% 1,969 2,057 4.5%
    % of total revenues 3.3% 3.6% 3.6% 3.7%
    EBIT margin 4.8% 2.1% 3.3% 2.4%
    Others
    Revenue (Rs m) 608 729 20.0% 1,093 1,397 27.8%
    % of total revenues 2.3% 2.7% 2.0% 2.5%
    EBIT margin -9.3% -8.2% -15.0% -10.2%
    Total* 26,853 26,793 54,032 55,069

    * Excluding unallocated items

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