Working capital management has been the primary focus for Titan wherein the company generated healthy OCF of | 1020 crore through better inventory management (liquidation of excess bullion inventory) and higher focus on gold-on-lease for inventory replenishment. Also, lower capex requirements (| 66 crore vs. | 169 crore in H1FY20) have led to improvement in cash position of the company with it being net cash surplus in Q2FY21 vs. net debt as on Q4FY20). We maintain our revenue estimates but reduce our earnings estimates by 10%, 4% in FY21, FY22E, respectively, to factor in...

We retain Accumulate on TTAN as steady recovery across Jewellery, watches and Eyewear is sustaining in October. We believe improving consumer sentiments, higher walk-ins with improved conversion rates and ticket sizes, robust e-com watches sales and better product mix in eyewear division are positives. Jewellery division is expected to be back to growth in 3Q on back...

Titan's standalone business recovered to 89% (consolidated recovered to 98%) with the jewellery business growing by 9% in Q2FY2021; watches and eyewear business recoveredto 56% and 61%, respectively. Consolidated OPM declined 433 bps to 6.9%, affected by hedging loss and lower operating leverge. Operating profit was down 40% to Rs. 313 crore. Higher demand during the festive season and improving wedding demand will help Titan post sustained recovery in the jewellery business going ahead. We have fine-tuned our estimates for FY2021 to factor in lower-than-expected...

With recovery on the horizon, we reiterate our BUY rating on the stock, with a revised target price of Rs. 1,183 based on 58x FY22E EPS. Revenues hit hard due to closure of stores Q1FY21 consolidated revenues decline 61.6% YoY to Rs. 1,979cr as demand slumped owing to restrictions in place amidst ongoing crisis. Jewelry sales dropped 56.2% YoY to Rs. 1,824cr with segment posting EBIT loss of Rs. 68cr (vs. profit of Rs. 437cr in Q1FY20). Watch sales plummeted to Rs. 76cr, down 89.4% YoY and recorded an operating loss of Rs. 173cr (vs. Rs. 119cr profit in 1QFY20). This is due to the downturn...

In July, retail jewellery segment posted 1% increase with advancement of activations. However, Watches and Eyewear segments yet to witness significant improvement. Other expenses remained high due to increase in ineffective hedges. Going ahead, ineffective hedges are likely to reduce substantially with normalization of demand scenario. We have revised our FY21E EPS at Rs 12.3 (-37.6%) and maintained our...

Since the outbreak of the pandemic, the perception of gold as an asset class has seen healthy traction. The management indicated that sentiments for plain gold jewellery and gold coins have improved on the back of significant surge in gold prices and expectations of further spike. Overall recovery rate for jewellery division rose to 77% in June and 101% in July (due to preponing of studded activation, low base effect). The management expects to exit Q2FY21E with recovery rate of 80% and gradual improvement in ensuing quarters. Owing to sluggish demand for studded jewellery, we...

line and profit during this period, reported net loss of Rs 297 cr in June quarter. On consoldiatd basis, Revenue from operations stood at Rs 1979 crore in Q1 June 2020, tumbling 61.5% from Rs 5151 crore in the same period last year. During the quarter, the company sold gold-ingots aggregating Rs 601 crore to various customers dealing in bullion, which is disclosed as other operating revenues. The sale was done to reduce inventory given the low level of sales due to the disruptions in activity. Titan reported a pre-tax loss of Rs 361 crore in Q1 June 2020 as against a profit before tax of Rs 520 crore in Q1 June 2019. The company received a tax rebate of Rs 64 crore in Q1 June 2020 as...

10 August 2020 Titans (TTAN) 1QFY21 results were broadly in line with estimates. Gold volumes declined by 81% during the quarter. However, decent recovery was seen in Jun20 with Tanishqs like-to-like growth declining 18% YoY. The recovery prospects in the jewelry segment (over 80% of sales) appear brighter with good demand in Jul20 (101% of sales in Jul19, albeit aided by weak base and significant activation in Jul20) and first week of Aug20 as well. However, recovery in watches/eyewear is tracking slower than jewelry. Another impact of ineffective hedges on margins in 2QFY21 as well is expected. However, we believe there is a possibility that recovery in the jewelry business may take place in 3QFY21, instead of 4QFY21 as guided by management. However, given the volatile demand and COVID environment, we prefer to be conservative and are assuming recovery in 4QFY21. Maintain with a TP of INR1,300 with 17% upside.

We cut FY21/22/23 EPS of TTAN by 50.8%, 1.6% and 1.0% following Rs2.7bn loss in 1Q and near term headwinds led by 1) tepid discretionary demand due to lower purchasing power and negative consumer sentiment 2) likely demand impact due to 43% jump in gold prices 3) Ineffective hedging loss in Jewellery (not Quantified) which is likely to continue for next 2 quarters 4)...

(%) Margins (%) FY20 was a challenging year with high gold prices affecting 1QFY20 and the COVID-19 crisis disrupting 4QFY20. Amid this tough operating environment, however, overall topline and earnings growth for Titan Company (TTAN) remained healthy at 6.4% and 8.9%, respectively. This continues a strong trend witnessed in recent years as a result of which sales and PAT CAGRs over FY1720 were also impressive at 17% and 24%, respectively, . Response to the COVID-19 crisis has also been heartening, with clear communication on safety and the addition of two new growth engines digital thrust and lower price point products. Barring high-value jewellery sales, we note that all of these growth engines are at play in FY21 as well. Gains from unorganized and other organized players continued unabated in FY20 and remain promising going forward as well. At less than 10% of the overall jewellery market, TTAN remains well-placed to capture further market share.

We have cut our DCF-based TP by 17% to Rs. 900/sh (implying 49x F22 earnings), to factor in the demand destruction and its second order impact on the balance sheet. EBITDA cuts for FY21/22 are 24/22% respectively. We downgrade the stock to a REDUCE (Earlier ADD) given the uncertainty in demand recovery. FY20 was all about soaring gold prices impacting fresh jewellery purchases. Demand unpredictability meant reliance on Gold loan reduced and focus increased on pushing sales via the capital heavy-gold exchange scheme. Note: While Jewellery biz sales grew 5.7% to Rs. 173.2bn, its capital employed ballooned to ~1.6x YoY to Rs. ~41bn in FY20 partly led by the shift to IND-AS 116. However, core cash conversion (CC) cycle (120 to 130 days) and capex has inched up too. FY21 is likely to follow the same capital-heavy template as gold exchange is revved up to salvage jewellery demand in the COVID19 era. Ergo, Return profile is likely to shrink at a time when cost of operations is likely to inch up (as the lower cost Gold Loan sourcing reduces in mix).

FY20 was a challenging year for Tanishq owing to a significant surge in gold prices (up ~31% YoY) and slowdown in discretionary spending. Despite the dual headwinds, Tanishq continued to outperform the industry with sustained market share gains (revenue growth: 6% YoY in FY20). With washout of sales in the second half of March, grammage fell 20% YoY in Q4FY20. Titan added highest number of Tanishq stores in a year (40) taking total store count to 327 as on FY20. Going forward, it expects a gradual recovery in jewellery space from H2FY21 onwards led by festive buying in...

Titan Company Limited's (Titan) consolidated revenue (including other operating income) declined by 3.6% to Rs. 4,711.6 crore. Revenue growth during January-February stood at 16% (driven by 16.5% growth in the jewellery business). Despite the decline in revenue, consolidated gross margin improved by 255 bps, led by higher studded ratio and lowering of customer discounts. The lockdown had a significant impact on the company's store fundamentals. April witnessed a complete washout, while gradual opening of stores led to 10-15% of sales in May. Post the easing of lockdown norms, 85% of Tanishq...

9 June 2020 While 4QFY20 results came in above expectations, negligible Apr20 sales due to lockdown, 1015% of normal sales in May20, and around 40% of normal sales in Jun20 are likely to render 1QFY21 a near washout. Management expects gradual recovery, targeting normalcy only in 4QFY21. In addition to the COVID-19 impact, higher prevailing gold prices and managements reluctance to reduce staff costs, while good for long-term growth, would have an adverse impact on near-term profitability. Lower other expenses as a percentage of sales (70bp YoY to 9.3%) and lower ad spend as a percentage of sales (80bp YoY to 2.1%) were offset by higher staff costs as a percentage of sales (20bp YoY to 6%). A) B) Watches segment sales grew 5.1% YoY to INR5.6b, with the EBIT margin up 740bp YoY to 9.

Titan's profitability was better than expectations and was driven by stronger margins in jewelry and watches divisions. Excluding IND-AS and one-offs, comparable EBITDA at Rs5.5bn was 18% ahead of our estimates and was marginally lower YoY. Management said that nearly 75% of its jewelry store network resumed operations and is expected to reach 90% by June-end. The pace of recovery has been encouraging at ~80% in jewelry and over 40% in watches, although this is for the very few stores, which were operational for around four weeks in May. Q1 will witness a sharp decline (zero sales in April, 10-15% in May and 30-40% expected...

Nevertheless, with efficient cost management, the company was able to post strong operational performance and margin expansion. Watches and Eyewear segments were impacted mainly due to lockdown, but margin expansion in watch division was encouraging. We have broadly revised our FY21E at Rs 19.8 and maintained our...

quarter. "The company was impacted significantly in the second half of March due to COVID-19 pandemic with the shutting down of all stores. OPM of the company stood at 13% compared to 9.17% in Q4FY19. As a result operating profits reported profit of Rs 612.36 crore compared to profit of Rs 448.5 crore. Other income fell 26% to Rs 41.71 crore. Interest cost rose by 242% to Rs 42.74 crore. Depreciation rose 150% to Rs 102.08crore. PBT was stood at Rs 509.25 crore compared to profit of Rs 451.13 crore. Profit...

We recommend a SELL on TITAN due to reduced consumer spending on discretionary items which could sharply affect its profitability in H1FY21.