2 August 2012
1QFY13 Results Update | Sector: Retail
Titan Industries
BSE SENSEX
S&P CNX
17,257
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (Rs b)
M.Cap. (US$ b)
5,241
TTAN IN
887.8
255/154
-1/13/3
197.1
3.6
CMP: INR222
TP: INR220
Neutral
Titan Industries (TTAN) posted lower than expected numbers for 1QFY13. Performance was weak for both
Jewelry and Watches. Adjusted PAT for the quarter was INR1.6b against our estimate of INR1.8b.
Jewelry volumes declined 21% due to high gold prices and slowdown in consumer demand. Sales grew 8%
and EBIT grew 9%; margins remained flat YoY at 10.2%.
Watch business reported 14% sales growth (3% decline in volumes) while Eyewear sales grew 6% though like-
to-like (LTL) sales growth was just 1%. PE (Precision Engineering) business continued to be profitable.
The management indicated aggressive store expansion plan for FY13 - 100 Fastrack stores and 35 Helios
stores.
Jewelry volumes have suffered due to high gold prices and weak consumer sentiment due to high inflationary
environment.
We have been cautious on the volume growth scenario in the Jewelry business. However, we are positive on
TTAN's store expansion strategy to drive volumes. This will work in favor of the company due to the franchisee
model. Our estimates are under review.
The stock trades at 27.5x FY13E and 22.2x FY14E EPS. Maintain
Neutral.
Sreekanth P.V.S.
(Sreekanth.P@MotilalOswal.com); +9122 3029 5120
Investors are advised to refer through disclosures made at the end of the Research Report.
1

Titan Industries
Jewelry: Volumes decline 21%; margins remain flat YoY, studded share declines;
estimated jewelry market decline at ~40%
Jewelry sales increased 8% to INR17.7b; EBIT grew 8.7% to INR1.8b; EBIT margin
remained flat to 10.2%. Studded jewelry proportion declined to 25% (32% in
4QFY12).
Jewelry volumes declined 21%; LTL sales growth in Tanishq was 3% (25% in 4Q)
while it declined for GoldPlus by 8% (23% in 4Q).
32% YoY higher Gold prices and poor consumer sentiment impacted the demand
conditions.
TTAN added 5 World of Titan stores and 8 Fastrack stores during the quarter.
Customer decline during the quarter stood at 2.4%, however ticket size increased
by 11%. Studded jewelry sales grew by 22% in 1QFY13.
Segmental performance: 4QFY12 Jewelry margins cross 10%; watch sales increase 27% YoY
INR m
Total Sales
Watches
YoY Growth (%)
Jewellery
YoY Growth (%)
Others
YoY Growth (%)
Total EBIT
Watches
YoY Growth (%)
EBIT Margin (%)
Jewellery
YoY Growth (%)
EBIT Margin (%)
Others
1QFY11
12,584
2540
21.8%
9,505
49.6
538
37.5
1,116
416
46.9
16.4
683
223.0
7.2
17
2QFY11
15,428
3594
21.6%
11,274
37.0
560
80.6
1,754
774
32.9
21.5
1,026
77.8
9.1
-47
3QFY11
19,633
3268
35.6%
15,808
49.9
557
38.4
2,051
602
70.2
18.4
1,500
102.3
9.5
-52
4QFY11
17,662
3257
15.6%
13,617
37.3
788
90.5
1,039
65
-83.7
2.0
1,073
67.8
7.9
(99)
1QFY12
20,400
3154
24.2%
16,471
73.3
775
44.0
2,106
480
15.4
15.2
1,661
143.4
10.1
(36)
2QFY12
21,138
4174
16.1%
16,312
44.7
652
16.3
2,157
672
-13.2
16.1
1,499
46.0
9.2
(14)
3QFY12
24,632
3831
17.2%
19,859
25.6
942
69.1
2,316
480
-20.2
12.5
1,785
18.9
9.0
51
4QFY12
1QFY13
23,055
22,258
4138
3607
27.0%
14.4%
17,997
17,755
32.2
7.8
920
896
16.8
15.7
2,310
2,293
534
504
722.8
4.9
12.9
14.0
1,823
1,806
69.9
8.7
10.1
10.2
(47)
(16)
Source: Company, MOSL
Jewelry volumes decline 21% YoY …
…continuous decline in jewelry volumes due to high gold prices
Source: Company, MOSL
2 August 2012
2

Titan Industries
LTL sales growth slows down; Gold Plus performance disappointing
2QFY12
Tanishq GoldPlus
Sales Gr %
39
44
LTL Growth %
31
49
Stores
125
30
Jewelry
3QFY12
Tanishq GoldPlus
33
24
26
13
129
32
4QFY12
1QFY13
Tanishq GoldPlus
Tanishq GoldPlus
38
36
11
(1)
25
23
3
(8)
129
32
132
32
Source: Company, MOSL
Jewelry volumes decline 21%
Jewelry
Volume Gr %
Customer Gr %
Studded Share %
Sales Gr %
2QFY12
3
28
45
3QFY12
(5)
8
26
25
4QFY12
1QFY13
(7)
(21)
4
(2)
32
25
31
8
Source: Company, MOSL
Watches: 14% sales growth; volume decline 3%; margins decline 130bp
YoY
1QFY13 Watch sales increased 14% YoY to INR3.6b; volume decline by 3% (14%
growth in 4QFY12).
World of Titan and large format stores reported muted increase in LTL sales growth;
Helios and Fastrack reported double digit growth in LTL sales growth.
World of Titan sales increased 14%, Fastrack sales increased 86% and Helios sales
increased 177%. Like to like growth in World of Titan was 9% (18% in 4QFY12), in
Helios at 19% (-9% in 4QFY12) and in Fastrack at 12% (16% in 4QFY12). Large format
watch stores posted a 3% increase in LTL sales growth (19% in 4QFY12).
EBIT margins declined 130bp YoY due to a 2% increase in excise duty despite price
hikes.
Watch sales growth picks up; aggressive expansion plans across format
Watches
2QFY12
Sales
LTL
20
400
100
52
16
19
16
10
72
24
Stores
(x)
317
14
64
NA
3QFY12
Sales
LTL
10
470
77
24
17
11
8
18
21
(1)
Stores
(x)
326
21
85
NA
4QFY12
Sales
LTL
18
390
95
34
27
14
14
(9)
16
19
Stores
(x)
332
25
102
NA
1QFY13
Sales
LTL
Stores
(x)
337
25
110
NA
World of Titan
Helios
Fastrack
LFS - Watches
Sales Gr
Volume Growth
14
9
177
19
86
12
23
3
14
(3)
Source: Company, MOSL
Eyewear sales up 6%; EBIT losses reduce to INR16mn; PE business profitable
Others reported 16% increase in sales and EBIT of INR-16m with losses in
accessories and Eyewear even as PE business continued to grow profitably.
Eyewear reported 6% sales growth with LTL sales growth of 1%.
Titan Eye+ LTL sales up due to promotions
Stores
Sales Gr%
LTL Gr %
2QFY12
185
16
(19)
3QFY12
191
77
26
4QFY12
205
32
(1)
1QFY13
209
20
1
Source: Company, MOSL
3
2 August 2012

Titan Industries
Valuation and view
We remain cautious on the volume growth scenario in the Jewelry business. We are
lowering our earnings estimates by 4-8% for FY13 and FY14 to factor in lower jewelry
volumes and watch sales. We believe demand would remain subdued in both the
segments in the coming quarters. However, we are positive on TTAN's store expansion
strategy to drive volumes. This will work in favor of the company due to the franchisee
model. The stock trades at 27.5x FY13E and 22.2x FY14E EPS. Maintain
Neutral.
2 August 2012
4

Titan Industries
Titan Industries: an investment profile
Company description
Titan is one of the largest specialty retailers in India.
The company is a market leader in watches and a
pioneer in the branded jewelry market. The company's
economy segment watch 'Sonata' is the largest selling
watch in the country. Titan entered the branded jewelry
segment in 1996 with the Tanishq brand and continues
to be the largest player in this segment.
Key investment risks
Rise in gold prices would impact volume growth in
Jewelry division impacting the margins.
Longer than expected break even period of Titan
Eye+ is likely to strain profitability of the company.
Recent developments
TTAN added 5 World of Titan stores and 8 Fastrack
stores during the quarter.
Key investment arguments
Titan is a market leader in the organized segment
of the domestic watch industry with ~60% market
share. The branded watch retailing segment is
expected to report strong growth given that 60% of
the watch retailing industry is dominated by the
unorganized segment.
Tanishq, Titan's branded jewelry brand, is the largest
player in the Rs70b branded jewelry market in India.
Branded jewelry accounts for less than 10% of the
total jewelry market in India and is expected to
report 40% CAGR over the next 5 years.
Operating margins are expected to expand, as fiscal
benefits from units in backward areas and aggressive
cost cutting initiatives undertaken by the company
yield results.
Valuation and view
We are cutting FY13 and FY14 estimates by 4-8% to
INR8.1 in FY13 and INR10 in FY14.
The stock trades at 27.5x FY13E and 22.2x FY14E EPS.
Maintain
Neutral.
Sector view
We believe specialty retailers are better placed to
ward off the impact of the current slowdown. Ability
to generate cash flows to adequately finance
expansion plans put them in a better position.
Comparative valuations
Titan
Inds.
P/E (x)
EV/EBITDA (x)
EV/Sales (x)
P/BV (x)
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
FY13E
FY14E
27.5
22.2
18.2
11.6
1.8
1.5
10.2
7.7
Shoppers
Stop
35.9
26.3
16.0
12.5
1.2
0.9
4.1
3.6
EPS: MOSL forecast v/s consensus (INR)
MOSL
Forecast
FY13
FY14
8.1
10.0
Consensus
Forecast
8.5
10.6
Variation
(%)
-4.4
-5.8
Target Price and Recommendation
Current
Price (INR)
222
Target
Price (INR)
220
Upside
(%)
-1.1
Reco.
Neutral
Stock performance (1 year)
Shareholding pattern (%)
Jun-12
Promoter
Domestic Inst
Foreign
Others
2 August 2012
53.1
3.8
16.2
27.0
Mar-12
53.4
4.5
15.0
27.1
Jun-11
53.3
6.2
12.5
28.0
5

Titan Industries
Financials and valuations
2 August 2012
6

Titan Industries
N O T E S
2 August 2012
7

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Titan Industries
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