PICTH PRESENTATION ON

TITAN COMPANY LIMITED

PRESENTED BY: DISHA

IFAP BATCH - 6
 INDUSTRY DYNAMICS
• India is the 5th largest retail market in the world
• The current market size of Indian retail industry is about US$ 500 bn (Source: IBEF) and is expected to grow at the rate of 15-
20% p.a.
• By 2018, the Indian retail sector is likely to grow at a compound annual growth rate (CAGR) of 13 per cent to reach US$ 950
billion
 KEY POINTS
• SUPPLY : Players are now moving to Tier II and Tier III
cities to increase penetration and explore untapped
markets
• DEMAND : Healthy economic growth, changing
demographic profile, increasing disposable incomes,
changing consumer tastes and preferences
• ENTRY BARRIERS : Regulatory issues, supply chain
complexities, inefficient infrastructure, and automatic
approval not being allowed for foreign investment in retail
• SUPPLIERS POWER : Depends upon the target
segment, the format followed, and products on offer.
• CUSTOMERS POWER : High bargaining power due to
wide availability of choice
•COMPETITION : New entrants (business houses and
international players) including foreign players are
expected to further intensify the competition
PROSPECTS
• Organized retail is expected to grow at a rate of 25% p.a.
• Sales numbers in discount seasons are significantly higher
than at other times prompting retailers to start discounts
earlier and have longer than usual sale season
• Online retailing and direct selling are becoming
increasingly popular in India thereby boosting growth of
retail sector
• Luxury retailing is gaining importance in India
• Rural retailing is another area of prime focus for many
retailers
• An increase in the double-income households trend
• Growing preference for branded products and higher
aspirations
• Growing liberalization of the FDI policy in the past decade
• With the arrival of the Transnational Companies (TNC), the
Indian retail sector will undergo a transformation
 WATCH INDUSTRY
• In 2012, the market size of the Indian time wear
industry was approximately 4,000 to 4,200 crore
• Despite the presence of global players and the opening
up of the market, the Indian market has been dominated
by a single player, Titan
• Male watch buyers dominate the Indian market
accounting for around 65% of total sales, whereas
females represent the remaining 35% of total sales
•The watch industry in India has a lot of scope in terms of
volume and value, as the penetration is still low and the
unorganized sector is quite large
JEWELLERY INDUSTRY
• In FY 14, the Indian gems and jewellery industry has
contributed US$ 34,746.90 million to India's FEEs
• The aggregate foreign direct investment (FDI)
inflows in diamond and gold ornaments during the
period April 2000-June 2014 was Rs 2,154.55 crore
(US$ 356.53 million)
• The domestic gems and jewellery industry had a
market size of Rs 251,000 crore (US$ 41.53 billion) in
2013, with potential to touch Rs 500,000-530,000
crore (US$ 82.75-87.71 billion) by 2018
• FY14 witnessed an increase of 12.65 per cent in
export of cut and polished diamonds with the segment
touching US$ 19,635 million.
• The industry also saw an increase of 11.98 per cent in
imports of rough diamonds with figures of US$ 16,716
million, signifying a growth in cutting, polishing and
other manufacturing activities in India
• India imported 163.11 million carats of rough
diamonds valued at US$ 16.34 billion and exported
36.46 million carats of polished diamonds worth US$
20.23 billion in 2013
• Indian exported gems and jewellery worth US$ 36.04
billion in 2013
 COMPANY PROFILE

10
• An Indian designer and manufacturer of watches , 9
jewellery, precision engineering components and other 8
accessories including sunglasses, wallets, bags, belts, 7
fragrances and helmets. 6
• It is the world’s fifth largest wrist watch manufacturer 5
and exports watches to nearly 32 countries around the 4
world. 3
• Titan Company is also the largest jewellery retailer in 2

India with over 160 Tanishq boutiques and 2 Zoya stores, 1

0
over 30 Gold Plus stores 2010 2011 2012 2013
•  It also sports over 300 Titan Eye+ stores
Current Ratio Quick Ratio Inventory Turnover Ratio
• Brands of Titan : Fastrack, Sonata, Raga, Octane, Operating Margin (%) Gross Profit Margin (%) Net Profit Margin (%)
Xylys, Nebula, Zoop, Titan Eye+, Tanishq, Goldplus,
Zoya and Skinn.

Number of Stores
450
400
350
300
250
Axis Title

200
150
100
50
0
World of Fastrack Helios Tanishq Godlplus Zoya Eye+
Titan
 INVESTMENT HIGHLIGHTS
• Watches and Accessories Division:
Titan continued to dominate the watch market with a market share exceeding 65%.
As per recent quarters, consumer demand is relatively stable. Sonata’s Ocean series continues to do very well – Ocean
Series III launched.
Brands like Fossil, Casio, Seiko, most swiss brands and fashion brands continue to do well but the challenge is to fight for
market share in consumer daurable.
Company has the largest retail and distribution network for watches and accessories in India.Its watches are available in
over 9000 multi-brand dealer outlets across 2500 towns.
New manufacturing plant is being set up in Coimbatore to manufacture high-end stainless steel cases
Company is present in 32 countries and focus is on establishing good distribution network
Two new categories Fragrances and motorcycle Helmets were launched.
Future Outlook : With stable government at the centre and rupee expecting to remain stable and overall consumer segment
is expected to be good. The watch division will continue to invest in its brands, introduce new products and enhance the
retail presence and target market share.
• Jewellery Division:
The Jewellery Industry was affected due to three reasons one being the abolition of gold-on-lease scheme which gave the
company low financing cost 180 days credit and natural hedging for gold prices, second being the 8020 rule for import of
gold squeezed the legal supply and increased the domestic premium and third being the increase in customs which
aggravated the supply side situation.
The domestic sales got affected due to the first factor and the financial performance was affected due to the second factor.
The competitive situation was also intensifying but inspite of all this the company ended on a better note.
The company launched new product collections that were stunning looking and offered real value for money. Also
established karigar centre in Feb 2014.
• Eyewear Division:
The eyewear industry is estimated to be growing on an average of 16% CAGR in the last 5 years.
 In order to push sales from sunglasses, Titan Eye plus is working on improving merchandise (product offerings) and re-
doing the sunglasses section in the Titan Eye Plus stores.
In 2014, the company added 70 new models under ‘Glares’ brand and it is also planning to add up 60 new stores which
will be mostly franchised this fiscal to the existing network of 270 stores across India
 FINANCIALS
Years Mar '14 Mar'15 E Mar'16 E Mar'17 E
Income         Growth 7.94% 13.17% 13.74% 13.88%
Manufactured Goods Other Income 120.22 123.66462 140.6518 160.17218
Watches 1624.9674 2096.2079 2683.146 3434.4271 Stock Adjustments 99.41 618.32308 703.2592 800.86091
Growth 25.85% 29.00% 28.00% 28.00%
Total Income 11147.02 13108.449 14909.09 16978.251
Jewellery 7005.9795 7566.4579 8171.774 8743.7987
Growth 6.00% 8.00% 8.00% 7.00% Expenditure        
Others 194.3916 262.42866 351.6544 467.70036 Raw Materials 8151.29 9274.8461 10548.89 12012.914
Growth 31.64% 35.00% 34.00% 33.00%
Power & Fuel Cost 0 37.099385 42.19555 48.051655
Manufactured Goods Total 8825.33 9925.0945 11206.58 12645.926
Growth 9.66% 12.46% 12.91% 12.84% Employee Cost 540.43 618.32308 703.2592 800.86091
Traded Goods Other Manufacturing Expenses 0     
Watches 201.9057 214.02004 229.0014 247.32156 Selling and Admin Expenses 0     
Growth -55.60% 6.00% 7.00% 8.00%
Jewellery 1519.7857 1793.3471 2134.083 2560.8997 Miscellaneous Expenses 1290.76     
Growth 13.82% 18.00% 19.00% 20.00% Preoperative Exp Capitalised 0     
Others 297.5988 342.23862 393.5744 448.67483 Other expenses including S&A 1290.76 1483.9754 1687.822 1922.0662
Growth 16.30% 15.00% 15.00% 14.00%
Total Expenses 9982.48 11414.244 12982.16 14783.892
Traded GoodsTotal 2019.2902 2349.6058 2756.659 3256.8961
Growth -1.30% 16.36% 17.32% 18.15% Operating Profit 1044.32 1570.5406 1786.278 2034.1867
Total Sale of Products 10844.6287 12274.7 13963.23 15902.822 PBDIT 1164.54 1694.2052 1926.93 2194.3589
Sale of tools and componenets 18.2665     
Interest 87.13 96.8208 96.8208 96.8208
Income from services
provided 4.8715        0.10798919 0.12 0.12 0.12
Total Other income 23.138 27.07146 31.94432 37.694301 PBDT 1077.41 1597.3844 1830.109 2097.5381
Growth 16.07% 17.00% 18.00% 18.00%
Depreciation 67.55 73.94244 82.87044 93.58404
Other operating Revenue        
Sale of precious / semi-   6.2% of gross block
precious stones 78.6152      Other Written Off 0 0 0 0
Sale of gold/ platinum 17.3165     
Profit Before Tax 1009.86 1523.442 1747.239 2003.9541
Scrap sales 5.3062     
Total - Other operating Extra-ordinary items 0 0 0 0
revenue 101.2379 106.2998 111.6148 118.31167 PBT (Post Extra-ord Items) 1009.86 1523.442 1747.239 2003.9541
Growth -2.60% 5.00% 5.00% 6.00%
Tax 275.12 411.32934 471.7545 541.0676
Revenue from Operations 10969.0046 12408.072 14106.79 16058.828
Excise Duty 41.61 41.61 41.61 41.61   27% tax rate
Net Sales 10927.39 12366.462 14065.18 16017.218 Reported Net Profit 734.76 1112.1127 1275.484 1462.8865
Years Mar '14 Mar'15 E Mar'16 E Mar'17 E
Sources Of Funds        
Total Share Capital 88.78 88.78 88.78 88.78
Equity Share Capital 88.78 88.78 88.78 88.78
Share Application Money 0 0 0 0
Preference Share Capital 0 0 0 0
Init. Contribution Settler 0 0 0 0

Preference Share Application Money 0 0 0 0

Employee Stock Opiton 0 0 0 0
Reserves 2433.96 3546.0727 4821.557 6284.4435
Revaluation Reserves 0 0 0 0
Networth 2522.74 3634.8527 4910.337 6373.2235
Secured Loans 606.84 606.84 606.84 606.84
Unsecured Loans 200 200 200 200
Total Debt 806.84 806.84 806.84 806.84
Minority Interest 0 0 0 0
Policy Holders Funds 0 0 0 0
Group Share in Joint Venture 0 0 0 0
Total Liabilities 3329.58 4441.6927 5717.177 7180.0635
Application Of Funds        
Gross Block 1072.62 1192.62 1336.62 1509.42
Rate of increase 0.21809737     
Less: Accum. Depreciation 458.39 532.33244 615.2029 708.78692
Net Block 614.23 660.28756 721.4171 800.63308
Capital Work in Progress 32.87 37.099385 42.19555 48.051655
  0.00300804 0.003 0.003 0.003
Investments 3.09 4.9465846 5.626073 6.4068873
  0.00028278 0.0004 0.0004 0.0004
Inventories 3869.39 3977.5058 4535.018 5161.3983
  166.622091 167 167 167
Sundry Debtors 154.13 170.5142 191.901 218.40648
  5.34370055 5.3 5.3 5.3
Cash and Bank Balance 892.67 2407.2156 3308.461 4312.5994
Total Current Assets 4916.19 6555.2357 8035.381 9692.4042
Loans and Advances 545.05 708.565 921.1345 1197.4749
Fixed Deposits 0 0 0 0
Total CA, Loans & Advances 5461.24 7263.8007 8956.515 10889.879
Deffered Credit 0 0 0 0
Current Liabilities 2396.48 3091.6154 3516.296 4004.3046
  0.21930946 0.25 0.25 0.25
Provisions 385.38 432.82615 492.2814 560.60264
  0.03526734 0.035 0.035 0.035
Total CL & Provisions 2781.86 3524.4415 4008.577 4564.9072
Net Current Assets 2679.38 3739.3591 4947.938 6324.9718
Minority Interest 0 0 0 0
Group Share in Joint Venture 0 0 0 0
Miscellaneous Expenses 0 0 0 0
Total Assets 3329.57 4441.6927 5717.177 7180.0635
 VALUATION
Rf 0.0832Kd 0.0876
Rp 0.06Wd 0.242325
beta from bloomberg   Ke 0.1498
Beta 1.11We 0.757675
Ke 0.1498   

Terminal
  Mar '14 Mar '15 Mar '16 Mar '17 Mar '18 Mar '19 Mar '20 Mar '21 Mar '22 Mar '23 Mar '24 Value

Operating Profit 1044.32 1570.5406 1786.278 2034.1867 2328.98 2656.37 3024.91 3439.47 3922.07 4479.37 5127.53GROWTH
NOPAT 762.3536 1146.4946 1303.983 1484.9563 1700.15 1939.15 2208.18 2510.81 2863.11 3269.94 3743.1 0.05
Depreciation 67.55 73.94244 82.87044 93.58404 106.44 121.868 140.381 162.597 189.256 221.246 259.635 
Total 1874.2236 2790.9777 3173.132 3612.7271 4135.57 4717.38 5373.48 6112.88 6974.43 7970.56 9130.27 
Net changes in WC -1062.55 -896.4641 -996.0096 -1100.693 -1217.6 -1329.4 -1433.7 -1523.1 -1600 -1651.7 -1666.7 
Less: CAPEX 192.05 120 144 172.8 207.36 248.832 298.598 358.318 429.982 515.978 619.174 
FCF 619.6236 1774.5136 2033.122 2339.2338 2710.62 3139.1 3641.18 4231.5 4944.42 5802.85 6844.36 84820
WACC 0.13472739                     
PV 619.6236 1563.8237 1578.994 1601.0283 1634.94 1668.58 1705.66 1746.84 1798.8 1860.45 1933.83 23965.3
Value of the firm 41677.8806
Less Debt 806.84
Less Cash 892.67

Strategy : BUY
EQUITY VALUE 39978.3706
EPS(STOCK PRICE) 450.308297
 HISTORICAL P/E : 21.0258

Relative Valuation
Average PE 36.9     Peers FY15E
Median PE 34.3     ITC 28.0
2015-2016 EPS 14.37    
MPS(AVG) 529.6961     HUL 39.0
MPS(Median) 493.22016    
Dabur 34.9
Number of Shares 88.78    
Equity 47026.4201 GCPL 33.7
Equity Value(median) 43788.086 Value(Avg) 6
GSKCH 36.5
Add:Debt 806.84 Add:Debt 806.84
Less:Cash 892.67 Less:Cash 892.67 Jubilant 55.9
EV 43702.26   46940.59
        TTKP 33.3
Value of stock 493.22016 Marico 33.6

  FY14 FY15E FY16E

Average- EV/EBIDTA 25.2 24.7 20.2
Median-EV/EBIDTA 25.3 24.8 19.8
1,111.87 1,644.48 1,869.15
EBITDA
EV Median 28164.32 40762.31 36983.86
EV Average 28035.5 40645.91 37839.95
 RATIOS
Year FY14 FY15E FY16E FY17E
Sales(Rs Lakhs) 10927.39 12366.46151 14065.18311 16017.21822
Profit before Interest and tax(PBIT) 976.77 1496.598172 1703.407815 1940.602674
EBITDA(Rs m) 1111.87 1644.483052 1869.148695 2127.770754
Pretax profit(Rs m) 1009.86 1523.441987 1747.238846 2003.954056
Earnings adjusted 734.76 1112.11265 1275.484358 1462.886461
EBITDA Margin 10.18% 13.30% 13.29% 13.28% 18000
EBIT Margin 8.94% 12.10% 12.11% 12.12% 16000
Net Margin 6.72% 8.99% 9.07% 9.13% 14000
12000
Sales(Rs Lakhs)
ROE 29.13% 30.60% 25.98% 22.95% 10000
Profit before Interest
ROACE 22.07% 25.04% 22.31% 20.37% 8000
6000
and tax(PBIT)
EBITDA(Rs m)
Market Cap 33203.72 33292.5 33292.5 33292.5 4000
Less : Cash 892.67 2407.22 3308.46 4312.60 2000
0
Total Debt 806.84 806.84 806.84 806.84 FY14 FY15E FY16E FY17E
EV 33117.89 31692.12 30790.88 29786.74
EV/EBITDA 29.785757 19.27178534 16.47320975 13.99903657
EV/Sales 3.0307228 2.562747989 2.189155894 1.859670024
EV/EBIT 33.905515 21.1761079 18.07604629 15.34922166
Operating Cost ratio 0.9135283 0.923 0.923 0.923
Asset Turnover Ratios 2.0008991 1.702478097 1.570385624 1.470835274
Current Ratio 1.7672313 1.859935991 2.004546895 2.123242331
Receivables Turnover 70.89723 72.52452516 73.2939613 73.33673688
Inventory Turnover 2.1593622 2.363952918 2.478439289 2.477804725
THANK YOU