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- 03 Feb 2023
- ICICIdirect Research
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TITAN REVENUE GROWTH EXPECTED TO REMAIN HEALTHY
TITAN - 3409 Change: -24.30 (-0.71 %)News: Titan's overall consolidated revenues (including gold bullion sale: Rs 315 crore) grew 16% YoY to Rs 11609 crore (I-direct estimate: Rs 11353 crore). Despite healthy mix, gross margins declined 140 bps YoY to 23.9%, mainly owing to higher base (the company had recorded inventory gains on diamond) and possible reduction in making charges owing to higher competitive intensity. Other expenses and marketing spends as a percentage to sales increased 76 bps and 28 bps YoY, respectively. Subsequently, EBITDA margins declined 280 bps YoY to 12% (I-direct estimate: 13.6%). On the segmental front, EBIT margins for jewellery division declined 240 bps YoY to 11.9% while watches segment reported EBIT margins of 10.1% vs. 11.2% Q3FY22. Owing to lower than anticipated operational profitability, PAT de-grew by 10% YoY to Rs 912.0 crore (I-direct estimate: Rs 1072 crore)
Views: Titan continues to be one the fastest growing discretionary companies (three year CAGR: 23%) in our retail coverage universe. Robust performance in challenging times reaffirms our thesis of long term market share gains for Titan. It has, over the years, withstood challenges and emerged as a resilient player. Sharp rise in gold prices and slowdown in discretionary demand could pose challenges in the near term but the long term story remains intact with the company aspiring to grow jewellery revenues by 2.5x by FY27 (implied CAGR: 20% from FY22 base)