Thursday, 20 September 2012

Incredible stocks - Titan Industries Pt-2

Lets take a detailed look at Titan Industries before deciding to invest in the company for the long term.

Consumption accounts for 60%-70% of India's GDP. It is a reflection of the fact that ours is purely a consumer-based economy which is only set to grow in the future, notwithstanding temporary hiccups here and there.
Titan Industries is a company which has given successful products one after the other. Be it their watches, jewellery or eyewear.

The company has a very extensive retail chain with 836 stores. It has 331 World of Titan stores, 130 Tanishq and Zoya stores, 200 Titan Eye stores and 83 Fastrack stores. Titan Industries also has 700 after sales service centres. If these are anything to go by, they do reflect the demand for Titan Industries' products. The company has a definite brand value.

Now for the specifics. We have taken the data of the last 4yrs of Titan Industries to have a good enough picture of the company's performance.

Titan Industries has grown its sales over the past 4yrs at a CAGR of 31.09% from 2293cr to 8839cr. Over this period Operating Margin has remained in the range of 8.4% to 9.45% approx. Which is the industry average. It speaks of the consistency that the company has on its brand. Titan Industries has seen a very good growth of its earnings as indicated by its EBITDA which has grown at a CAGR of 35.01%.

Titan Industries has judiciously used its funds for further growth as inferred from the ROCE which has increased from 34.19% to 63.18%. This is a sign of a good company. It means that the company has an eye on growth and hence it is using its funds to increase profits even more.

In the time frame of 4yrs Titan Industries has consistently reduced its debts and presently has zero debts as on March'12 as given by the debt/equity ratio which has reduced from 0.59 to 0. The consistency with which the debt has reduced over the years to a zero, speaks volumes about the company. It has no debt whatsoever now and its standing in the industry is that much stronger because of this one fact.

Couple this fact with the consistent OPM and ROCE parameters and we can have a positive insight into what the management is going to do in the coming years. We can well predict a very good future for the company.

Last but not the least, the current ratio of Titan Industries for the fiscal March'12 stands at 1.32. It means that the current liquid position of the company is comfortable and it can easily meet its short-term obligations and liabilities if any.

The CMP at the time of the post was Rs.241.70

Titan Industries has given additions to its product line-up in keeping with the consumer's tastes from time to time. This reflects the mindset of the company and forms the company's backbone. This has given it good penetration and sales reach and has increased its sales volumes. The effect is that the company was able to maintain its OPM over the years even though it was expanding and growing all the time. A sign of a good company.

On the basis of the above facts and figures we can very well say that it is a good stock to invest for long-term.