Hold Titan Industries; target of Rs 225: Emkay

30969 Investors following Titan Ind. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold Titan Industries; target of Rs 225: Emkay

Emkay Global Financial Services has recommended hold rating on Titan Industries with a target of Rs 225, in its July 28, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy ILandFS Investment: PPFAS Accumulate JSW Steel; target of Rs 947: Angel Broking Accumulate Bank of India; target Rs 434: Angel Broking ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Titan Ind See messages about Titan Ind Titan Ind BSE | NSE 01/06/12 Are Mutual Funds betting on Titan Ind?

Emkay Global Financial Services has recommended hold rating on Titan Industries with a target of Rs 225, in its July 28, 2011 research report.

"Titan Industries, revenue growth of 61% to Rs 20.2 bn, is 24% higher than our expectations, primarily driven by 72% increase in jewellery segment and 23% increase in watches business. EBITDA margins expanded marginally by 25 bps yoy to 9.1%, Higher other income, increase of 187% yoy, on account of Rs 10 bn cash on books, further aided APAT growth of 76.4% yoy to Rs 1.4 bn, above our expectations."

"Jewellery business witnessed a supernormal value growth of 72% yoy to Rs 16.3 bn, driven by sharp price increases in precious stones as well as gold and an indicative 30% volume growth. PBIT margins expanded 270 bps to 8.9%. We are surprised with the strong volume growth reported considering the sharp price increases of 25% yoy in gold and more than 50% in precious stones . We expect, going forward, volume growth should moderate and have built in a 23% volume growth in this segment for FY12E and 20% for FY13E. Watches revenue increased by 23% yoy to Rs 3.1 bn aided by ~18% volume growth. PBIT margins in this segment witnessed 180 bps decline to 14.6%. We expect, going forward, volume growth would be 10% for FY12E and FY13E. Others segment that includes Eyewear and Precision Engineering recorded revenue growth of 44% to Rs 775 mn for Q1FY12 with EBIT loss reducing sequentially, to Rs 36 mn. However, on a yoy basis, EBIT margins were at -4.6% vs +3.1% in Q1FY11. We expect this segment to grow at 15% CAGR over FY11-13E."

"Earnings upgrades triggered by rise in gold prices and not by upgrade in volume growth. Hence, we reiterate our concerns on discretionary spends and sustainability of volume growth in discretionary products in ensuing quarters. Further, valuations at 28X FY13E earnings do not offer comfort, being 15% higher than 5-year average PER. With no room for negative surpris e accompanied by risk of sharp de-rating in event of moderation of volume growth and earnings growth, we downgrade Titan to HOLD with price target of Rs 225 per share," says Emkay Global Financial Services research report.  

Bodies Corporate holding more than 50% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment