Tag - jewellery

24 Dec

Q4FY21 is expected to be normal – Titan

Update on the Indian Equity Market:
On Wednesday Nifty closed 1% higher at 13,601. Among the sectoral indices, Realty (+3.9%), Media (+3.3%), and IT (+2.4%) closed higher. None of the sectors closed lower. Wipro (+5.7%), Cipla (+3.7%), and Tata Steel (+3.40%) closed on a positive note. Hero Motors (-1.0%), Divis labs(-0.7%), and Titan (-0.5%) were among the top losers.

Excerpts from an interview of Mr. S Subramanian, CFO, Titan with CNBC-TV18 dated 22nd December 2020:

● Mr S. Subramanian said there is a strong space for growth in jewellery sector over the next 5-10 years.
● The company has established itself as the market leader and the balance sheet is stronger.
● On other businesses, he said wearables are now a very exciting opportunity. With focus of people on wellness the company is looking for substantial growth in that segment.
● On eyewear, he said the market is significantly underpenetrated and there is a lot of opportunity to grow.
● He expects the company to come out stronger post covid crisis and the focus will be on people.
● On guidance, he said the 4QFY21E is expected to be normal and the good news is vaccine coming.
● The footfalls are improving even in malls and he expects that the worst to be over.
● On weddings, he said that the spends on weddings are lower, it provides an opportunity for people to spend more on jewellery. The company is also witnessing an increase in ticket size spends.
● He said the devices which will track people’s well-being would become important and so (Digital fitness watches) in Watches is a very exciting area.

Consensus Estimate: (Source: market screener and Investing.com websites)
● The closing price of Titan was ₹ 1491 as of 23-December-2020. It traded at 149x/ 69x/ 56x the consensus Earnings per share estimate of ₹ 10/22/27 for FY21E/ FY22E/ FY23E respectively.
● The consensus average target price for Titan is ₹ 1068/- which implies a PE multiple of 40x on FY23E EPS of 27/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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09 Oct

Tanishq sees better recovery in demand in smaller towns- TITAN

Update on the Indian Equity Market:
On Thursday, Nifty ended 0.8% higher at 11,834 led by IT and Pharma stocks. The top gainers for Nifty 50 were Wipro (+7.3%), Cipla (+5.0%), and TCS (+3.0%) while the losing stocks for the day GAIL (-3.1%), ONGC (-2.8%), and ITC (-1.4%). Top gaining sectors were IT (+3.2%), Pharma (+2.5%), and Bank (+1.0%) while losing sectors were Media (-0.5%) and FMCG (-0.1%).

Edited excerpts of an interview with Mr Arun Narayan, Vice President, Category, Marketing & Retail, Tanishq at Titan Company Limited.; dated 07th October 2020 from Retail Economic Times:

Almost all Tanishq stores are open across the country and the Company has seen a really encouraging response from consumers. There has been positivity because of the festivals from August onwards. The Company believes that as they head into Dussehra and Diwali, the sentiment should only improve.

In towns, where malls contribute to a larger part of their business, the recovery has been even slower but there has been a steady improvement month on month and that gives them the confidence as they head into Dussehra and Diwali. Consumers are waiting to bring in positivity into their lives after months of being restrained and locked down and that is going to play out over the next two months i.e., in October and November.

The Company saw a greater improvement in plain gold and studded jewellery. In August, there was a period when the Company saw more investment buyers and increased demand for gold coins. That was the time when gold rates were going up significantly for maybe two weeks. But now that gold rates have cooled down, they found that recovery is pretty much even across both plain gold as well as studded jewellery.

The management is fairly optimistic about this season for many reasons; one is deferred demand from wedding shoppers. Weddings have got deferred from quarter one of this year to November, December and some of them also to quarter four and they believe that those who have weddings in their families will be back to shop for jewellery. Second, many consumers buy every year during this auspicious period and the Company knows they will be back.
Consumers seem to have accepted that gold rates may remain range-bound or fluctuate, but there is a belief that at least till this festive season, they may not see a significant uptick.

The Company has more than 13,000 customers who bought jewellery through video calls.
One can buy jewellery from the comfort of their homes, sitting with their family, through video calls and can make a remote contactless payment. All the documentation and invoices can be emailed to the customers and they can get the latest catalogues on their phone or device. One can buy jewellery from their nearest Tanishq store from the comfort of their homes. It is a whole new experience for the Company & the consumers as well with the virtual try-on and video calling. The way consumers have adopted that across metros and smaller towns has been really fantastic.

Consensus Estimate: (Source: market screener website)
The closing price of Titan Company Ltd was ₹ 1,254/- as of 08-October-2020. It traded at 127.1x/ 60.0x/48.8x the consensus EPS estimate of ₹ 9.9/20.9/25.7 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 1,068/- implies a PE multiple of 41.5x on FY23E EPS of ₹ 25.7/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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02 Mar

Demand intact amid high gold prices and Coronavirus: Mr S. Subramaniam,Titan

Update on the Indian Equity Market:

Amid rising concerns over Coronavirus becoming a pandemic, major global indices witnessed heavy selling with markets falling in the range of 2.5- 4.5%. India was no exception to this as the Nifty fell 420 points (-3.6%) to close at 11,202. FIIs continued to be net sellers as they sold Rs 30,648mn on Friday. The depth of weakness in Friday’s market was such that 39 out of 50 stocks in the index fell more than 2% with VEDL (-12.8%), TATAMOTORS (-10.9%) and M&M (-8.0%) being the biggest losers. Only two stocks in the index, MARUTI (0.2%) and IOC (0.1%) survived the day on the positive side. All the sectoral indices fell in the range of -2.4% (FMCG) to -7.3% (METAL) with -5.3% (IT) and MEDIA (-4.9%) being the other two biggest losers.

Excerpts from an interview with Mr S. Subramaniam, CFO- Titan, published in CNBC TV-18 on 27th February 2020.

  • Gold prices in India have hit record high levels as investors tried to shift from risky asset classes to safe assets. Mr Subramaniam said that he is not sure if there is any major impact on consumption due to the increase in gold prices and Coronavirus.
  • About Coronavirus, he said that the impact on the business due to the virus is extremely remote or small. Although the company relies on some supplies for watches from China, as of now the stock situation is not deteriorating.
  • The increase in the price of gold has not affected the demand for the company. He cited two possible reasons for this; first, people are now looking at gold as something which will be going up over time and second, there’s wedding season going on in the country.
  • In January, he gave guidance for the revenue growth around 11-13% for the quarter. He reiterated the target again in the interview as he is confident of achieving the target.
  • He talked about the demand situation in the current market. It is quite expensive to buy gold at these elevated prices. At the same time, because of issues like Coronavirus and microeconomic global situation, people may start looking at gold as an investment. As a result, there may be a pick-up in demand on the back of ETF gold coins rather than the jewellery side. Jewellery is still driven by festivals and customary requirements.
  • In the eyewear and watch business, the demand situation was not bad in January. It is still low but not as bad as it was in December. He expects a reasonable quarter for both these segments. He stated that the demand situation is possibly at the bottom and the company might witness improvement in the future.

Consensus Estimate: (Source: market screener website and investing.com websites)

  • The closing price of Titan was ₹ 1,254/- as of 28-February-2020.  It traded at 70x/ 55x/ 46x the consensus earnings estimate of ₹ 18.0/ 23.0/ 27.5 for FY20E/ FY21E/ FY22E respectively.
  • The consensus target price for Titan is ₹ 1276/- which implies a PE multiple of 46x on FY22E EPS of ₹ 27.5/- .
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