Result Update

November 12, 2018

Rating matrix
Rating : Buy Titan Company (TITIND) | 890
Target : | 1000
Target Period : 12 months Healthy operational performance; one-offs
Potential Upside : 12%
restrict PAT growth…
What’s changed?
 Titan reported revenue growth of 27.0% YoY to | 4567.2 crore (I-
Target Changed from | 950 to | 1000
direct estimate: | 4160.2 crore) driven by robust growth across all
EPS FY19E Changed from | 16.2 to | 16.1
divisions. The jewellery division reported robust revenue growth of
EPS FY20E Changed from | 20.5 to | 20.8
Rating Unchanged
29% YoY to | 3645.1 crore despite muted growth seen by the
industry (according to the management, industry grew 5-15%). The
Quarterly performance watches segment sustained its revenue trajectory with growth of
Q2FY19 Q2FY18 YoY (%) Q1FY19 QoQ (%) 17.5% YoY to | 678.8 crore. Revenues from the eyewear division
Revenue 4,567.2 3,582.2 27.5 4,451.0 2.6 grew 19% YoY to | 120.0 crore
EBITDA* 468.9 421.9 11.2 482.9 -2.9  Adjusting for exceptional expenses, EBITDA margins for the quarter
EBITDA (%)* 10.3 11.8 -151 bps 10.8 -58 bps declined marginally by 20 bps YoY to 11.6% (I-direct estimate 11.4%)
PAT* 301.1 277.9 8.3 328.1 -8.2 mainly on account of higher advertisement expense (up 40% YoY to
*Adjusted EBITDA for Q2FY19: | 531 crore, EBITDA margin: 11.6%. | 149.3 crore) and higher other expenses. Adjusted EBITDA grew
Adjusted PAT: | 357 crore 26% YoY to | 530.9 crore
Key financials  Titan has made provisions to the tune of | 29 crore as part of in inter
(| crore) FY17 FY18 FY19E FY20E corporate deposits in the IL&FS group. Also, the jewellery division
Net Sales 13,261 16,120 19,520 23,349 has incurred one-time franchisee compensations (| 15 crore) on
EBITDA 1,155 1,645 2,108 2,662
store takeover and inventory valuation loss of | 18 crore. Following
Net Profit 711 1,130 1,426 1,847 the same, PAT for the quarter grew only 8% YoY to | 301.1 crore.
Adjusted PAT grew ~29% YoY to | 357 crore
EPS (|) 8.0 12.7 16.1 20.8
Growth rebounds strongly in Q2FY19 for jewellery division
Valuation Summary After a soft operational performance in Q1FY19, the jewellery segment
FY17 FY18 FY19E FY20E
reported healthy revenue growth of 29% YoY to | 3645.1 crore, mainly
P/E 111.1 69.9 55.4 42.8 driven by volume growth of 24%. Retail sales growth came in at 38%,
Target P/E 124.8 78.6 62.3 48.1 with LTL sales growth of 32%. The reported growth trajectory is
EV to EBITDA 67.7 47.7 37.1 29.4 commendable, given headwinds faced by the industry, like surge in gold
Price to book 18.7 15.5 12.9 10.8 prices, subdued consumer sentiments and tightening of credit policy. The
RONW (%) 16.8 22.2 23.2 25.2 management indicated the industry grew 5-15% in Q2FY19, signalling
ROCE (%) 24.7 29.3 31.5 33.6 market share gains for Tanishq. On the profitability front, adjusted EBIT
margins for the division declined 100 bps YoY to 11.3% albeit on high
Stock Data base effect and fall in share of studded ratio by 200 bps YoY to 37%. The
Particular Amount management highlighted that festive demand has witnessed strong
Market Capitalisation (| Crore) 79,013.0 growth with retail sales growing ~29% in the first 40 days of Q3FY19,
Debt (FY18) (| Crore) 79.0 with management confident of clocking in 25% growth in Q3FY19.
Cash (FY18) (| Crore) 617.9
Robust H1FY19 for watches division
EV (| Crore) 78,474.0
The watches segment reported yet another stellar quarter in both revenue
52 week H/L 1006 / 731
and profitability terms. Revenues for the division grew 16.3% YoY to
Equity Capital (| Crore) 88.8
| 678.8 crore, with margins expanding 210 bps YoY to 16.4%. While
Face Value (|) 1
strong growth was witnessed across all channels, modern retail formats
and e-commerce performed exceptionally well. For H1FY19, the division
Price performance reported 16% growth with margins expanding ~600 bps to 17%.
1M 3M 6M 12M Factoring in the strong performance, we revise our watches division
Titan Company 13.0 -7.3 -14.0 9.0
estimates upwards for FY19, FY20E.
PC Jeweller 62.4 -9.2 -56.0 -74.4
TBZ 32.4 -15.9 -37.6 -45.4 Jewellery division to sustain strong performance; maintain BUY!
We continue to like the company given the healthy balance sheet (30%+
Research Analyst RoCE & virtually debt free status) and strong earnings growth trajectory.
Bharat Chhoda We anticipate revenues and earnings will grow at a CAGR of 20% and
bharat.chhoda@icicisecurities.com 29%, respectively, for FY18-20E driven by sustained market share gains
and aggressive foray towards enhancing its share in the wedding
Cheragh Sidhwa
cheragh.sidhwa@icicisecurities.com
jewellery space (higher contribution from 35% in FY18 to 50% by FY23).
We reiterate our BUY rating on the stock with a target price of | 1000.

ICICI Securities Ltd | Retail Equity Research

Variance analysis
Q2FY19 Q2FY19E Q2FY18 YoY (%) Q1FY19 QoQ (%) Comments
Revenue 4567.2 4160.2 3582.2 27.5 4451.0 2.6 Robust revenue growth across all divisions

Raw Material Expense 3,269.2 3,045.2 2,573.7 27.0 3,233.3 1.1

Employee Expenses 244.3 247.5 209.4 16.7 239.3 2.1
Advertising Expenses 149.3 145.6 106.6 40.1 155.4 -3.9
Other Expenses 435.5 249.6 270.6 60.9 340.1 28.1

EBITDA 468.9 472.2 421.9 11.2 482.9 -2.9 Adjusted EBITDA: | 531 crore
EBITDA Margin (%) 10.3 11.4 11.8 -151 bps 10.8 -58 bps Adjusted EBITDA margin: 11.6%
Depreciation 42.8 41.6 31.0 37.9 40.7 5.0
Interest 13.5 14.7 14.5 -7.1 10.9 23.9
Other Income 27.9 39.7 20.8 33.9 36.1 -22.8

PBT before Exceptional item 440.5 455.7 397.2 10.9 467.4 -5.7
Exceptional Item 0.0 0.0 -0.7 0.0
PBT 440.5 455.7 397.8 10.7 467.4 -5.7
Tax Outgo 137.7 127.6 118.9 15.9 138.8 -0.7
PAT 301.1 328.1 277.9 8.3 328.1 -8.2 Adjusted PAT grew 29% YoY to | 357 crore

Key Metrics
Jewellery
Revenues (| Crore) 3,645.1 3,297.8 2,825.0 29.0 3,642.6 0.1 Retail sales growth: 38%, LTL: 32%

Segment EBIT Margin (%) 11.3 NA 12.3 -105 bps 10.5 74 bps Adjusted for inventory loss and one time franchisee expense

Watches
Revenues (| Crore) 678.8 628.9 577.9 17.5 596.3 13.8 Strong growth continues

Segment EBIT Margin (%) 16.4 NA 14.3 212 bps 18.4 -195 bps
Source: Company, ICICI Direct Research

Change in estimates
FY19E FY20E
(| Crore) Old New % Change Old New % Change
Revenue 19,413.0 19,520.0 0.6 23,128.3 23,348.9 1.0
EBITDA 2,096.6 2,108.2 0.6 2,613.5 2,661.8 1.8
EBITDA Margin (%) 10.8 10.8 0 bps 11.3 11.4 10 bps
PAT 1,442.5 1,426.1 -1.1 1,816.0 1,846.8 1.7
EPS (|) 16.2 16.1 -0.9 20.5 20.8 1.5
Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 2

 Conference call highlights
Jewellery division
 The jewellery division has taken over two large and profitable
franchisee stores (annual sales of | 250 crore) in Hyderabad through
a win-win approach. Hence, it has recognised | 15 crore as
franchisee compensation costs in the current quarter. Also, the
division reported inventory valuation loss of | 18 crore, which has
already been reversed in October
 The management indicated the industry grew 5-15%. Hence, with
growth of 30%, Tanishq gained market share
 The management highlighted the festive demand has witnessed
strong growth with retail sales growing ~29% in the first 40 days of
Q3FY19, with the management confident of clocking 25% growth in
Q3FY19
 Adjusted EBIT margin for the segment contracted 100 bps YoY to
11.3% albeit with a high base effect and decline in share of studded
ratio by 200 bps YoY to 37%. Also, higher ad spends for the quarter
impacted profitability
 The company has added net 14 Tanishq stores (35,000 sq ft) in
H1FY19, taking total store count to 267. The pace of store additions is
expected to perk up in H2FY19 as the management has guided for 15
store openings in Q3FY19 itself and 40 stores by FY19E
Watches and other divisions
 The company, as part of its treasury operations, had invested | 145
crore in the IL&FS group in May and June in inter corporate deposits.
Consequent to the recent developments, the company has made a
provision of | 29 crore, representing 20% of the investment as a
measure of caution
 The watches segment continued its healthy trajectory with healthy
revenue growth of 18% YoY in Q2FY19, mainly due to strong sales in
modern retail formats and e-commerce channel and new collection
launches
 The management highlighted that festive season demand for the
watches segment was weak with anticipated growth of ~8%
 For H1FY19, EBIT margins expanded significantly by ~600 bps to
17%. However, the management has guided for 15-16% EBIT
margins for FY19E, signifying a decline in margins for H2FY19. The
decline in margin is mainly owing to accelerated investment in brand
building activities in H2FY19
 The division added three World of Titan (WOTs), seven Fastrack and
two Helios stores (1800 sq ft addition) in H1FY19
 The eyewear division reported strong revenue growth of 20% YoY
with LTL sales growth for Titan Eye Plus at 8%
 It added 13 new Titan eye plus stores. Currently, it has ~2.4 million
customers and expects to increase it by 50% to 3.7 million
customers by FY19E. Profitability is expected to be lower on account
of higher investments in brand building activities

ICICI Securities Ltd | Retail Equity Research Page 3

 Company Analysis
The wedding segment accounts for ~ 60% of the jewellery market in
India (| 150,000 crore of total | 2,50,000 crore), of which Tanishq’s market
share is ~ 3%. Titan is aiming to increase its wedding jewellery share in
total revenue from 35% in FY18 to 50% by FY23. Its sustained efforts
towards enhancing its share in the wedding jewellery space is proving to
be fruitful as it is growing at a much faster pace compared to non-bridal
jewellery. Since average ticket size for wedding jewellery is higher than
adornment jewellery, Titan’s aggressive foray into the wedding space is
expected to enhance asset turnover and return ratios, going forward.
We expect traction in the jewellery segment to continue on the back of
introduction of new collections with higher focus on the wedding
jewellery segment. In addition, with the rollout of GST, Titan has been a
beneficiary of the shift from unorganised to organised players with the
management indicating at market share gains in the quarter. We expect
Titan’s revenues to grow at a CAGR of 20% in FY18-20E mainly driven by
growth in the jewellery segment.
Exhibit 1: Revenue trend
30,000

23,349
19,520
24,000

16,120
| crore

13,261
18,000
11,276

12,000

4,567
4,451
4,275
4,067
3,930
3,599

3,582
3,398

4,107
2,803

2,680
2,391

6,000

-
FY16

FY17

FY18
Q3FY16
Q4FY16

Q1FY17
Q2FY17
Q3FY17

Q4FY17

Q1FY18

Q2FY18
Q3FY18

Q4FY18

Q1FY19
Q2FY19

FY19E

FY20E
Source: Company, ICICI Direct Research

Exhibit 2: Divisional performance (revenue)

19,313
25,000
16,041

20,000
13,257
10,596

15,000
8,621

10,000
3,570

3,643

3,645
3,425

3,358
Q3FY17 513 3,304

2,825

2,698
2,409
2,151

2,132
2,007

Q4FY17 5052,955
1,847

2,061
1,977

5,000
519

578

535

596

679
449

492
500

525

-
FY16

FY17

FY18
Q4FY16

Q1FY17

Q2FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

FY19E

FY20E

Watches Jewellery

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 4

Exhibit 3: Jewellery segment growth Exhibit 4: Watch segment growth

80 20 17
13 15
60 59 15 10
60 41 10 9
10 7
3 6
23 5 4 4 4 3
40 25 29 5 3
2
20

%
%

17 8 14 6 -
20 9 4
1

FY15

FY16

FY17

FY18
Q4FY15

Q1FY16
Q2FY16
Q3FY16
Q4FY16

Q1FY17
Q2FY17
Q3FY17
Q4FY17

Q1FY18
Q2FY18
Q3FY18
Q4FY18

Q1FY19
Q2FY19
1
(5)
-
(10) (5) (3)
Q4FY15
FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
FY18
Q1FY19
Q2FY19
(20) (15) (9) (15) (12)
(11)

Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Exhibit 5: EBITDA margin trend

13 11.8
11.4
12 10.8 10.8
10.6
11 10.2 10.2 10.3
9.9 9.9
10 9.0 8.7 8.8 8.7 9.0
%

8.2 8.3
9
7.5
8 7.1
7
6
FY16

FY17

FY18
Q1FY16
Q2FY16
Q3FY16
Q4FY16

Q1FY17
Q2FY17
Q3FY17
Q4FY17

Q1FY18
Q2FY18
Q3FY18
Q4FY18

Q1FY19
Q2FY19
FY19E
FY20E
EBITDA Margin

Source: Company, ICICI Direct Research

Exhibit 6: Net profit trend

1,847
2,000
1,800
1,426
1,600
1,130

1,400
| crore

1,200
823

1,000
711
675

800
600
329
306

303
278
282
240

233

239
215

226

400
191

187

179
177

166
151
146

121

200
-
FY15

FY16

FY17

FY18
Q1FY15
Q2FY15
Q3FY15
Q4FY15

Q1FY16
Q2FY16
Q3FY16
Q4FY16

Q1FY17
Q2FY17
Q3FY17
Q4FY17

Q1FY18
Q2FY18
Q3FY18
Q4FY18

Q1FY19
Q2FY19
FY19E
FY20E

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 5

 Valuation
We continue to like the company given the healthy balance sheet (30%+
RoCE & virtually debt free status) and strong earnings growth trajectory.
We anticipate revenues and earnings will grow at a CAGR of 20% and
29%, respectively, for FY18-20E driven by sustained market share gains
and aggressive foray towards enhancing its share in the wedding
jewellery space (increase contribution from 35% in FY18 to 50% by
FY23). We reiterate BUY rating on the stock with a target price of | 1000.

We believe Titan’s growth story will remain multi-pronged and drawn

over a longer time frame. Hence, we use a DCF based valuation to arrive
at a target price of | 1000.

Exhibit 7: Valuations
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 13,260.8 17.6 8.0 5.5 111.1 67.7 16.8 24.7
FY18 16,119.8 21.6 12.7 58.8 69.9 47.7 22.2 29.3
FY19E 19,520.0 21.1 16.1 26.2 55.4 37.1 23.2 31.5
FY20E 23,348.9 19.6 20.8 29.5 42.8 29.4 25.2 33.6
Source: Company, ICICI Direct Research

Exhibit 8: DCF Valuations

WACC(%) 10.8
Revenue CAGR of over FY18-24E (%) 20.0
Revenue CAGR of over FY25E-32E (%) 15.0
Sum of Discounted FCFF (| crore) 25010.0
Terminal Growth Rate (%) 5.0
Terminal Value (| crore) 62735.2
Enterprise Value (| crore) 87745.2
Net Debt/ (Cash) (| crore) -882.2
Target Market cap (| crore) 88627.4
No of shares (in crore) 88.8
Target Price (|) 1000
Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 6

Recommendation history vs. consensus estimate
1,220 100.0
90.0
1,020 80.0
820 70.0
60.0
620 50.0
(|)

(%)
40.0
420 30.0
220 20.0
10.0
20 0.0
Apr-16

Aug-16

Apr-17

Aug-18
Jan-16

Feb-16

Jul-16

Jun-18
Nov-15

May-16

Oct-16

Dec-16

Jan-17

Jun-17

Jul-17
Mar-17

Sep-17

Oct-17

Dec-17

Jan-18

Mar-18

May-18

Sep-18

Nov-18
Price Idirect target Consensus Target Mean % Consensus with Buy

Source: Bloomberg, Company, ICICI Direct Research

Key events
Date Event
Sep-10 Jewellery segment crosses | 1,000 crore (quarterly sales) mark
Nov-10 Jewellery segment witnesses 50% YoY growth and also crosses the | 1,500 (quarterly sales) mark
Feb-11 Weak watch segment margin (owing to one-time provision) leads blended margin to fall 110 bps YoY to 6.4%
Dec-11 Pace of revenue growth dips to 20-25% range owing to a slowdown in jewellery segment
Jan-12 The government changes import duty on gold from a flat | 300/ 10 gm to 2% while gold prices go up to that effect, jewellery demand remains unchanged
Aug-12 Jewellery segment reports negative growth for the first time in 27 quarters
Dec-12 Revival in jewellery segment - posts 40% YoY growth in revenues to | 2,515 crore
Jun-13 Jewellery segment posts healthy growth of 47% to | 2,600 crore
Sep-13 Jewellery stocks take a beating owing to the 80:20 rule imposed by the government for gold imports
Feb-14 Government allows the company to hedge gold in international markets

Mar-14 Government decides to allow five Indian private sector banks to import gold within prescribed limits, thereby easing concerns relating to sourcing of gold
May-14 RBI allows premium trading houses to import gold (under 80:20 rule) and also re-allows gold on lease
Dec-15 Launch of Titan JUXT Smart watches
Tanishq launches ‘Subham Collection' of heritage gold jewellery. It also introduces differentiated wedding line and colour stones, ‘Nakashi’. Gold plus introduced a
Dec-16 new ‘wedding’ collection, ‘Apsara’ collection and ‘Akriti’ collection of Diamantine jewellery in Q3FY17
Titan continues to expand its smart watch portfolio by launching four brands (Juxt, Juxt pro, Sonata Act, Fastrack Activity Tracker Band). Tanishq launches a
Mar-17 wedding jewellery collection 'RIVAAH'
Source: Company, ICICI Direct Research

Top 10 Shareholders Shareholding Pattern

Rank Name Last Filing Date %O/S Position (m) Change (m) (in %) Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
1 Tamilnadu Industrial Development Corporation, Ltd. 30-Sep-18 27.88 247.5 0.0 Promoter 52.9 52.9 52.9 52.9 52.9
2 Tata Group of Companies 30-Sep-18 24.98 221.7 0.0 FII 21.7 21.3 21.3 21.1 20.1
3 Jhunjhunwala (Rakesh Radheshyam) 30-Sep-18 5.82 51.7 0.5 DII 5.4 5.7 6.1 6.5 7.6
4 Matthews International Capital Management, L.L.C. 30-Sep-18 1.83 16.3 -2.3 Others 20.0 20.2 19.7 19.5 19.4
5 Life Insurance Corporation of India 30-Sep-18 1.63 14.5 -0.1
6 Jhunjhunwala (Rekha Rakesh) 30-Sep-18 1.30 11.6 0.0
7 The Vanguard Group, Inc. 30-Sep-18 1.23 10.9 0.0
8 BlackRock Institutional Trust Company, N.A. 31-Oct-18 1.08 9.6 0.0
9 SBI Funds Management Pvt. Ltd. 30-Sep-18 0.87 7.7 -0.3
10 Fidelity Management & Research Company 30-Sep-18 0.66 5.8 0.3
Source: Reuters, ICICI Direct Research
Recent Activity
Buys Sells
Investor name Value Shares Investor name Value Shares
ICICI Prudential Asset Management Co. Ltd. 11.42 1.03 Tata Asset Management Limited -197.06 -17.25
Grantham Mayo Van Otterloo & Co LLC 11.63 0.87 Sands Capital Management, LLC -48.82 -3.7
Mirae Asset Global Investments (India) Pvt. Ltd. 7.44 0.67 Matthews International Capital Management, L.L.C. -25.96 -2.3
Axis Asset Management Company Limited 6.05 0.54 Baron Capital Management, Inc. -11.53 -1.0
Jhunjhunwala (Rakesh Radheshyam) 5.55 0.50 Kotak Mahindra Asset Management Company Ltd. -5.71 -0.51
Source: Reuters, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 7

Financial summary
Profit and loss statement | Crore Cash flow statement | Crore
(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Total operating Income 13,260.8 16,119.8 19,520.0 23,348.9 PAT 711.5 1,130.1 1,426.1 1,846.8
Growth (%) 17.6 21.6 21.1 19.6 Add: Depreciation 110.5 131.4 158.6 180.2
Raw Material Expenses 9,429.2 11,686.2 14,093.4 16,671.1 (Inc)/dec in Current Assets -555.6 -1,443.9 -1,072.8 -1,502.2
Employee Expenses 793.9 885.1 1,015.0 1,237.5 Inc/(dec) in CL and Provisions 1,439.0 205.2 374.6 501.0
Mfg, Admin & selling Exps 1,882.3 1,903.8 2,303.4 2,778.5 Others 0.0 0.0 0.0 0.0
Total Operating Expenditure 12,105.3 14,475.1 17,411.8 20,687.2 CF from operating activities 1,705.5 22.8 886.5 1,025.7
EBITDA 1,155.5 1,644.7 2,108.2 2,661.8 (Inc)/dec in Investments -401.3 382.7 -20.5 -27.7
Growth (%) 23.6 42.3 28.2 26.3 (Inc)/dec in Fixed Assets -404.8 -373.5 -253.5 -257.0
Depreciation 110.5 131.4 158.6 180.2 (Inc)/dec in CWIP -45.4 108.7 13.0 0.0
Interest 37.7 52.9 48.3 34.3 Others -103.4 -50.3 0.0 0.0
Other Income 70.5 88.9 110.2 137.7 CF from investing activities -954.8 67.6 -261.1 -284.7
PBT 1,077.7 1,549.2 2,011.4 2,585.0 Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0
Exception items 102.7 16.7 0.0 0.0 Inc/(dec) in loan funds -113.1 79.0 -28.1 -5.1
Growth (%) 12.3 57.2 31.2 28.5 Others 24.7 -330.4 -380.2 -642.9
Total Tax 276.0 427.9 583.3 736.7 CF from financing activities -88.4 -251.4 -408.3 -648.0
Share of JV/Minority int 12.4 -2.8 -2.0 -1.5 Net Cash flow 662.3 -161.0 217.1 92.9
PAT 711.5 1,101.9 1,426.1 1,846.8 Opening Cash 116.7 778.9 617.9 835.0
Growth (%) 3.3 58.0 29.3 29.4 Closing Cash 778.9 617.9 835.0 928.0
EPS (|) 8.0 12.7 16.1 20.8 Source: Company, ICICI Direct Research
Source: Company, ICICI Direct Research

Balance sheet | Crore Key ratios

(Year-end March) FY17 FY18 FY19E FY20E (Year-end March) FY17 FY18 FY19E FY20E
Liabilities Per share data (|)
Equity Capital 88.8 88.8 88.8 88.8 EPS 8.0 12.7 16.1 20.8
Reserve and Surplus 4,143.6 5,001.1 6,047.0 7,250.9 Cash EPS 9.1 13.9 17.9 22.8
Total Shareholders funds 4,232.4 5,089.9 6,135.8 7,339.6 BV 47.7 57.3 69.1 82.7
Total Debt - 79.0 50.9 45.8 DPS 0.0 2.6 3.7 6.2
Deferred Tax Liability (3.3) (32.9) (32.9) (32.9) Cash Per Share 8.8 7.0 9.4 10.5
Other long term liabilities 26.4 (1.8) (1.8) (1.9) Operating Ratios
Total Liabilities 4,255.5 5,134.2 6,151.9 7,350.7 EBITDA Margin (%) 8.7 10.2 10.8 11.4
Assets PBT Margin (%) 8.1 9.6 10.3 11.1
Gross Block 1,184.6 1,558.1 1,811.6 2,068.7 PAT Margin (%) 5.3 6.9 7.3 7.9
Less: Accu Depreciation 129.5 230.0 388.6 568.8 Inventory days 129.0 122.8 128.0 127.0
Net Block 1,055.1 1,328.1 1,423.0 1,499.9 Debtor days 5.5 5.7 5.8 5.6
Capital WIP 152.1 43.4 30.4 30.4 Creditor days 83.6 80.5 81.0 81.0
Goodwill on Consolidation 123.0 123.0 123.0 123.0 Return Ratios (%)
Total Fixed Assets 1,330.1 1,494.5 1,576.4 1,653.2 RoE 16.8 22.2 23.2 25.2
Investments 441.4 58.7 79.2 106.9 RoCE 24.7 29.3 31.5 33.6
Inventory 4,925.7 5,924.8 6,845.4 8,124.2 RoIC* 28.7 29.9 32.1 34.2
Debtors 207.6 295.7 310.2 358.2 Valuation Ratios (x)
Loans and Advances 637.7 994.4 1,132.2 1,307.5 P/E 111.1 69.9 55.4 42.8
Other Current Assets - - - - EV / EBITDA 67.7 47.7 37.1 29.4
Cash 778.9 617.9 835.0 928.0 EV / Net Sales 5.9 4.9 4.0 3.3
Total Current Assets 6,550.0 7,832.8 9,122.7 10,717.9 Market Cap / Sales 6.0 4.9 4.0 3.4
Creditors 2,665.2 2,489.8 3,127.6 3,699.6 Price to Book Value 18.7 15.5 12.9 10.8
Other Current Liabilities 1,342.5 1,723.2 1,464.0 1,400.9 Solvency Ratios
Provisions 141.2 141.1 137.0 129.0 Debt/EBITDA 0.0 0.0 0.0 0.0
Total Current Liabilities 4,148.8 4,354.0 4,728.6 5,229.6 Debt / Equity 0.0 0.0 0.0 0.0
Net Current Assets 2,401.1 3,478.8 4,394.1 5,488.3 Current Ratio 1.6 1.8 1.9 2.0
Others Non Current Assets 82.8 102.2 102.2 102.2 Quick Ratio 0.4 0.4 0.5 0.5
Application of Funds 4,255.5 5,134.2 6,151.9 7,350.7 Source: Company, ICICI Direct Research
Source: Company, ICICI Direct Research .

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ICICI Direct Research coverage universe (Retail)
CMP M Cap EPS (|) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%)
Sector / Company (|) TP(|) Rating (| Cr) FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E FY18 FY19E FY20E
Bata India 1,020 1,160 Buy 13,109 17.4 23.5 28.5 58.6 43.4 35.8 35.4 28.4 23.2 19.9 22.1 23.7 15.1 17.8 19.0
Shoppers Stop 490 535 Hold 4,310 1.3 9.5 11.3 371.5 51.7 43.4 20.8 18.2 15.4 9.6 10.4 11.5 1.2 8.1 9.0
(SHOSTO)
Titan Company 890 1,000 Buy 79,013 12.7 16.1 20.8 69.9 55.4 42.8 47.7 37.1 29.4 29.3 31.5 33.6 22.2 23.2 25.2
(TITIND)
Trent 327 410 Buy 10,866 2.6 4.8 6.9 124.8 67.6 47.6 55.8 41.8 32.9 10.0 12.0 14.7 5.5 9.5 12.5
ABFRL 195 225 Buy 15,025 1.5 2.3 3.4 127.8 84.3 56.8 33.7 27.2 21.8 8.5 11.3 13.1 10.8 14.0 17.2

Source: Company, ICICI Direct Research

ICICI Securities Ltd | Retail Equity Research Page 9

RATING RATIONALE
ICICI Direct Research endeavours to provide objective opinions and recommendations. ICICI Direct Research
assigns ratings to its stocks according to their notional target price vs. current market price and then
categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified
and the notional target price is defined as the analysts' valuation for a stock.

Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

ICICI Securities Ltd | Retail Equity Research Page 10

ANALYST CERTIFICATION
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ICICI Securities Ltd | Retail Equity Research Page 11