Titan Industries - Results inline with our estimate - Dolat Capital

Net Sales at Rs.30bn up 17% v/s our estimate of Rs.28.7bn. Gross margin declined by 40bps YoY to 23.1%. EBITDA at Rs.2.8bn up 32.8% as EBITDA margins expanded by 64bps to 9.4% (our estimate of 10.2%). Advertising cost to sales ratio stood at 3.6% down 133bps YoY and down 70bps QoQ. PAT at Rs.2bn up 24% v/s our estimate of Rs.2bn.

- Strong growth in jewellery business driven by festive & marriage season and space addition.

- Grammage growth of 12%. Studded share which declined to 22% expected to improve in Q4FY13

View: Maintain Buy rating with a target price of Rs.347 (25x FY15E)

We believe that revenue growth which has been impacted in FY13 to improve FY14 onwards. We believe aggressive store expansion to drive growth and marginal profile to improve on back of improvement in watch business performance, mix improvement in jewellery and breakeven in eye wear business. Premium valuation to sustained on account of 1) strong medium term growth visibility, 2) best in class management and 3) Single stock to play multiple themes. The stock trades at 25x FY14E EPS of Rs.10.7 and 19x FY15E EPS of Rs.13.9. We recommend a BUY with a price target of Rs.347 (25x FY15E - EPS of Rs.13.9).

Source : Equity Bulls

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