Titan Company Ltd's Q4FY18 consolidated net profit rises 71.6% yoy to Rs308.23cr : Beats Estimates

The company’s consolidated revenue stood at Rs4,107.20cr, up 13.28% yoy but down 5.87% qoq.

May 10, 2018 01:05 IST India Infoline Research Team

Titan Company Ltd Q4FY18

Consolidated Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 4,107.20 13.3
EBITDA 435.47 70.3
EBITDA Margin (%) 10.6 355
Net Profit (adjusted) 308.23 71.6
***EBITDA margin change is bps


Reco. Price


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Titan Company Ltd’s revenue grew by 13.3% yoy to Rs4,107cr owing to growth of Jewellery and other businesses, however declined by 5.9% qoq. EBITDA came in at Rs435cr, up 70.3% yoy and 3.1% qoq. EBITDA margin expanded by 355bps yoy and 92bps qoq to 10.6% owing to favourable shift towards high margin studded jewellery. Company’s adjusted Net profit stood at Rs308cr, up 71.6% yoy and 9.5% qoq.

Standalone Revenue, EBITDA and Adjusted PAT came at Rs3,917cr, Rs455cr and Rs336.2cr respectively. Standalone revenue came in-line with the estimate of Rs4,008cr, while EBITDA and PAT came above estimates of Rs399cr and Rs282cr respectively.

Other Highlights
• Revenue from Jewellery segment (Rs3,358cr) grew by 13.6% on yoy basis. Revenue from watches (Rs492cr) and eyewear (Rs108.6cr) segment declined by 2.5% yoy and 2.6% yoy respectively. 
• Jewellery had good sales growth in Q4FY18 on the back of a very successful diamond jewellery activation as well as resounding reception to the revised gold exchange policy launched in March, 2018.
• EBIT margin in Jewellery and Watches segment expanded by 369bps and 246bps yoy respectively.
• Studded jewellery ratio in Q4FY18 stood at 36% vs. 34% yoy.
• Hedging gain of Rs18cr resulted in profitability expansion.
• PAT growth is despite an ex-gratia provision for bonus to employees amounting to Rs30cr.
• Watches did very well despite the lack of an activation this quarter and Jewellery division’s studded activation was a success, helping the company achieve higher gross margins.
• GST transition has been smooth, however, has impacted sunglasses business for sometime.  However, it increased the working capital by more than Rs250cr including GST refund claim of Rs60cr in northern units.
• Watches division launched a number of collections in Q4FY18. Raga Twirl and Ladies Purple Valentine’s collections were launched under the Titan umbrella while Varsity, Trendies and Valentines tees collections were launched under the Fastrack brand.

Store performance Q4FY18
Stores Sales value growth Like to Like growth
World of Titan -3% -4%
Tanishq and Zoya 19% 17%
Helios 32% 5%
Fasttrack 1% -6%
LFS 14% 11%
Titan Eye+ 10% 1%

Store additions
• Titan has added 10 new Tanishq stores in Q4FY18. Further, two additional Gold Plus stores were converted into Tanishq in Q4FY18. The remaining five stores are expected to be converted by Q1FY19E. In the eyewear segment, Titan added 16 new stores in Q4FY18.

Stores Store count Addition in FY18
World of Titan 486 12
Tanishq and Zoya 256 46
Helios 70 21
Fasttrack 166 11
Titan Eye+ 500 52

Pre result commentary by Management
• Revenue growth to be aided by successful revision in gold exchange policy and strong retail growth for watch segment across multi brand retail and e-commerce.
• EBITDA margin expansion is on account of favourable shift towards studded jewellery and other cost control benefits by company.
• Underperformance of the sunglasses business is likely to pressurize the profitability of the eyewear business to a great extent.

Con Call Highlights
Jewellery sales growth was driven by revision of the gold exchange policy. Company has reduced deduction in the value of gold from 2-8% to 0-5%.
• Management maintained its target of achieving 2.5x sales in the jewellery segment FY18-23E.
• Management expects to maintain FY18 jewellery margins (12.8%) going further.
• Titan intends to open 40 new stores in FY19E with focus more on smaller towns. 75% of the new stores would be opened on a franchisee basis.
• Titan has ~25% of the organised market share in prescription eyewear business. Overall market share is 8-10%.

Technical View:

Titan Company Ltd is currently trading at Rs. 981.50, down by 4.2 points or 0.43% from its previous closing of Rs. 985.70 on the BSE.
The scrip opened at Rs. 986 and has touched a high and low of Rs. 994.95 and Rs. 966 respectively. So far 36,78,908 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 50 DMA.

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