Titan Company rises after decent Q4 outcome

Titan Company rose 1.77% to Rs 1037.50 after standalone profit rose 21% to Rs 356.79 crore on 5.6% decline in net sales to Rs 4370.10 crore in Q4 March 2020 over Q4 March 2019.

Revenue was impacted due to the lost sales in March as all stores were closed from 22 March till the 1st week of May. Closure of shopping malls in early March in some states as per the directive of those state governments also took a toll on net sales.

Standalone profit before tax (before exceptional items) stood at Rs 516 crore in Q4 March 2020, rising 10.9% from Rs 465 crore in Q4 March 2019. Total tax expense surged 58% to Rs 158.84 crore in Q4 March 2020 over Q4 March 2019.

EBITDA stood at Rs 644 crore in Q4 March 2020, rising 26% from Rs 511 crore posted in the same period last year. Heavy decline in advertising expenses (down 32% YoY) aided net profits.

Consolidated net profit declined 1.5% to Rs 343.07 crore on a 4.3% decline in net sales to Rs 4617.31 crore in Q4 March 2020 over Q4 March 2019.

Jewellery division revenue declined 5.8% due to lost sales in March. Revenue growth for January & February was about 16.5%. The diamond studded activation in the quarter did well and wedding jewellery sales continued to be good till the disruption.

Watch and wearable segment revenue grew 5% in Q4 March 2020, despite the significant loss of sales in March. Revenue growth of January & February month was about 15.7%. PBT margin at 11.9% for Q4 March 2020 was higher by 6.4% compared to previous year, led by improvement in gross margin and reduction in advertising & other expenses.

Eye wear segment revenue declined 17% in Q4 due to decline in trade channel. Growth in January and February remained flat.

Titan's other business grew at 12% in Q4 March 2020 over Q4 March 2019. In Fragrances, Fastrack perfumes continued to increase its distribution reach.

Titan Engineering and Automation (TEAL) had a good quarter with a growth of 37%. Titan said both the automation division and the aerospace and defense divisions did exceptionally well in the year. Titan's 72.3% owned subsidiary, CaratLane grew 48% in January and February but the disruption in March as many of the stores are located in malls that were shut, CaratLane grew at 12% in Q4 March 2020.

Consolidated net profit increased by 7.5% to Rs 1492.66 crore on a 6% rise in net sales to Rs 20,767.70 crore in fiscal year 2020 (FY20) over fiscal year 2019 (FY19).

Meanwhile, the company has announced a dividend of Rs 4 per share. Titan Company manufactures fashion accessories such as watches, jewellery and eyewear.

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