Titan Q3: Analysts expect profit to grow 25% at Rs 205 cr

Titan Industries, India's leading producer of watches, is likely to report robust earnings in third quarter of financial year 2012-13 due to margin expansion and volume growth in jewellery segment.

Standalone profit after tax is expected to go up by 25 percent year-on-year to Rs 205 crore and net sales are seen going up by 19 percent YoY to Rs 2,910 crore in October-December quarter, according to CNBC-TV18 poll.
Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 34 percent to Rs 285 crore in the third quarter of FY13 from Rs 213 crore in a year ago period.
Operating profit margin is seen growing by 110 basis points YoY to 9.8 percent in December quarter.
According to analysts, jewellery segment of the company is likely to see a positive volume growth (around 5 percent) largely due to a good festive season (Benefit from wedding demand + Diwali & Dhanteras sales) as against volume decline in previous quarters.
Jewellery volume growth is expected to turn positive for the 1st time in 4 quarters.
Rest of the 19 percent topline growth will be driven by higher realizations, growth in store expansion and Same-Store-Sales growth, say analysts.
Watches (around 15 percent YoY growth) and eyewear sales are also expected to pick up in the December quarter due to price increased by the company.
Analysts feel rupee depreciation could hurt gross margin as cost of imports increase. Titan’s watch and accessories segments have high dependence on imports.
However, increasing share of high margin diamond + studded jewellery & savings in excise are likely to support margin expansion, analysts add. Investors should watch out for:
-Clarity on gold lease arrangement and direct import of gold as management had earlier guided for 40-50 basis points savings due to direct import
-Margin performance both in the jewellery and watches division to be keenly watched after surprises in Q2FY13
-Footfalls post festive season Also Read
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