Titan Company Limited · NSE:TITAN
Titan — Q3 FY2020 Earnings Presentation
60 slides from Titan's earnings presentation, Feb 4, 2020
Slide 1: Exchange filing cover letter - Investors Presentation
TIT/\N CO MP/\NY SEC 79 / 2019-20 4th February 2020 The General Manager, DCS-CRD The General Manager, DCS-CRD BSE Limited National Stock Exchange oflndia Ltd Corporate Relationship Department Exchange Plaza, 1st Floor, New Trading Ring Bandra-Kurla Complex, Rotunda Building, P J Towers Bandra (East)
Slide 2: Earnings Presentation – Q3 FY'20 and 9M FY'20
Titan Company Limited Earnings Presentation – Q3 FY ’20 and 9M FY’20 (For quarter and nine months, ended 31st December 2019) 04th February, 2020 1
Slide 3: Disclaimer
Disclaimer This document, which has been prepared by Titan Company Limited (the “Company”/”we”/”our”), are solely for information purpose and do not constitute any offer, invitation, recommendation, invitation to purchase or subscribe for any of the securities, and shall not form the basis of or be
Slide 4: The Journey
The Journey 1984 1992 1998 Conceived 1987 Timex JV 1996 2003 2005 2008 2010 PED 2007 2009 Accessories 2011 2013 Perfumes 2016 2017 3
Slide 5: Titan Today
Titan Today 5th ~$15 bn largest watch market cap maker globally ~$2.8 bn 4 annual revenue times in Forbes Asia Fab Fifty 1,791 ~8 k stores with 2.3mn+ sq.ft. retail space employees on rolls 11k+ mutli-brand outlets 4 that sells our watches
Slide 6: Our Strengths
Our Strengths Design and Development 800+ New time products every year reddot Award to 2 Edge watches Differentiated Jewellery Collections Customized lenses with 3D visual mapping Manufacturing 12 Manufacturing and assembly facilities State of the art Karigar Centres for Jewellery Components exporte
Slide 7: Our Brands
Our Brands Luxury Premium Mid Market Mass Market 6
Slide 8: Jewellery Division
AA a Jewellery Division
Slide 9: Jewellery
Jewellery Brands TANISHQ: flagship brand ZOYA: luxury segment play MIA: Tanishq sub-brand for faishonable fine jewellery CARATLANE: a Tanishq partnership, omni-channel Manufacturing Studded jewellery manufactures mostly in-house Plain gold jewellery mostly outsourced 3 manufacturing facilities 4 sta
Slide 10: Jewellery
Jewellery _ = v ae TANISHQ HUM HAR SHAADI — KE Efe TAYAAR HALEN! Y ® ructcered Caratlone US LASESTONLNE ELEY STORE
Slide 11: Jewellery manufacturing facilities
Jewellery Karigar Center, Hosur • Pantnagar • Sikkim Manufacturing Facilities/ • Hosur Karigar Centers 10
Slide 12: Tanishq Boutique
Tanishq Boutique 11
Slide 13: Zoya Boutique
Zoya Boutique 12
Slide 14: Mia Store
Mia Store 13
Slide 15: CaratLane Store
CaratLane Store 14
Slide 16: Tanishq
nN TANISHQ RIVAAH FOR EVERY INDIAN E
Slide 17: Product collections
ATTATA PRODUCT b Me In Action FACES This contemporary collection is designed to reflect the diverse facets that make you the person you are. "4 Me In Action The Facets Series allows you to express : f\ revel in today? k Mela Action GET A FREE GOLD PENDANT @ (lui he aa Celebrate, Dance, Shimmy all ni
Slide 18: Watches Division
AA »™ y Watches Division rN 17
Slide 19: Watches - Overview
Watches - Overview Brands 6 major in-house brands & 7 licensed brands Manufacturing 6, state of the art, watch and component manufacturing/assembly plants Points of Sale EBO: World of Titan, Fastrack Stores OWN MBO: Helios MBO: present across 11k+ dealers/ MBOs LFS: Large format departmental stores
Slide 20: Watches - Manufacturing
Watches - Manufacturing Watch factory, Hosur Pantnagar factory Roorkee Pantnagar • Sikkim Manufacturing/ Assembly facilities • Hosur Watch Assembly, Hosur 19 • Coimbatore
Slide 21: 'World of Titan' Store
‘World of Titan’ Store 20
Slide 22: Fastrack Store
fastrack | u 2 na - ia = + ON Fastrack Store o
Slide 23: Helios Store
- ~ _=Seni°9s HE WATCH STORE BY TITAN Helios Store 6b
Slide 24: Titan
ITAN” ECTHONeE %
Slide 25: Sonata
SONATA MISSION MANGAL €) 0° Ee: re TO: CN, KHUD PAR YAKEEN FREE MISSION MANGAL BOOK MY SHOW VOUCHERS (250) ON ALL ORDERS ON THE WEBSITE
Slide 26: Eyewear Division
AA »™ y Eyewear Division rN
Slide 27: Eye Wear
Eye Wear Brands TITAN EYE PLUS: Retail brand TITAN: main in-house frames and lenses brand FASTRACK and GLARES: in-house sunglasses brand LICENSED BRANDS: for frames and lenses Manufacturing State of the art lens lab in Chikkaballapur Satellite lens labs in major cities to improve turn around time Fr
Slide 28: Eye Wear
Eye Wear In-house brands Frames Sunglasses Manufacturing Integrated Eyewear facility - Chikkaballapur Lens Labs 27
Slide 29: Titan EyePlus Store
Titan EyePlus Store 28
Slide 30: Fragrances & Taneira
AA »™ y Fragrances & Taneira rN
Slide 31: Fragrances
Fragrances Brands SKINN by Titan Fine French perfumes at very attractive price points Entry into body mist category in FY 18- Skinn Kissed Manufacturing Manufactured in France by celebrated perfumers, and distilled from the finest ingredients Bottled in France and India Points of Sale Sold through W
Slide 32: Perfumes
PERFUMES
Slide 33: Fine French Perfumes
THE NEW COLOUR OF CLASS. AMALFI BLEU. — £AU DE TOILETTE SS = — == - ——— cole —= —— a — THE FRESH NEW FRAGRANCE FOR MEN AND WOMEN. SK| YY PETAN- Fine French Perfumes
Slide 34: Taneira
Taneira • This youngest brand of Titan Company Ltd was launched as pilot in Feb 2017 with 2 stores in Bangalore. • Anchored in special occasion wear Sarees from across India. • Evolved as a natural extension of Titan’s proposition – self expression and design. • Large, unorganized, deeply Indian 5,0
Slide 35: Our Stores
Our Stores 34
Slide 36: Q3 Performance
AA »™ y Q3 Performance rN
Slide 37: Q3 Performance – Standalone
Q3 Performance – Standalone Company • Revenue for the company grew by 9.4% in the quarter led by the growth in Jewellery division. PBT grew by only 6% and PBT margin fell to 10.3% due to one off employee costs and lower interest income. Base year also had INR 70 cr provision for ICD with IL&FS. • Q3
Slide 38: Q3 Performance – Standalone: Jewellery
Q3 Performance – Standalone Jewellery • Retail growth of 15% in the quarter. The industry itself witnessed reasonable growth in the festive season and the company itself did better and market share gains were evident. • The base quarter, Q3’19, had a large institutional order for gold coins of ~INR
Slide 39: Q3 Performance – Standalone: Watches & Eye Wear
Q3 Performance – Standalone Watches & Wearables • Revenue declined by 2.4% due to poor customer sentiment specifically in December and this led to sharp decline in primary sales to trade and e-commerce channels. Our own retail stores (WOT, Fastrack and Helios) grew quite well despite the weakness in
Slide 40: Q3 Performance – Standalone: Fragrances & Taneira
Q3 Performance – Standalone Fragrances & Taneira • Fragrances & Taneira grew strongly at 33% . • Fragrances continue to increase its distribution reach and witnessed good growth in excess of 20% during the quarter over the same period last year. • Perfumes were launched also under the Fastrack brand
Slide 41: Q3 Performance – Subsidiaries and JV
Q3 Performance – Subsidiaries and JV Titan Engineering and Automation Ltd (TEAL) - 100% owned Subsidiary • TEAL continued to grow at very strong pace of 34% in Q3 on back of strong order book and winning new orders with global clients. The 2 divisions, Aerospace & Defence and Automation continue to
Slide 42: Retail Network
Retail Network Net Additions (in 9M’20) As on 31st Dec’19 Stores Square Feet Stores Towns Sq. Ft. Tanishq 34 114K 321 200 1.2mn Zoya 0 0 3 2 15K CaratLane 27 27K 82 32 66K Mia 8 2K 38 19 13K WOT 6 0K 492 220 403K Fastrack 7 1K 179 84 91K Helios 12 7K 88 41 75K Titan Eye+ 41 27K 578 228 381K 41
Slide 43: Retail Growth – Q3'20 and 9M'20
Retail Growth – Q3‘20 and 9M’20 Q3’20 9M’20 Sales value Like-to-Like Sales value Like-to-Like growth growth growth growth Tanishq 15% 9% 13% 7% CaratLane 74% 14% 83% 23% World of Titan 11% 11% 6% 6% Fastrack 1% -4% -1% -4% Helios 23% 12% 14% 7% LFS (for 8% 3% 10% 6% Watches) Titan Eye+ 11% 3% 13% 6%
Slide 44: P&L – Q3'20 & 9M'20 - Standalone
P&L – Q3’20 & 9M’20 - Standalone in INR Crores Q3'19 Q3'20 YoY 9M FY'19 9M FY'20 YoY Revenue from operations 5,672 6,206 9% 14,398 15,581 8% Other Income 61 20 123 106 Total Income 5,733 6,226 9% 14,521 15,687 8% COGS 4,248 4,663 10,587 11,414 Gross Contribution 1,486 1,563 5% 3,935 4,273 9% Employe
Slide 45: Total Income – Q3'20 and 9M'20
Total Income – Q3’20 and 9M’20 Total Income (1) Q3'19 Q3'20 Growth % 9M FY'19 9M FY'20 Growth % (in INR Crores) Jewellery 4,890 5,409 11% 12,044 12,984 8% Watches 641 625 -2% 1,910 2,059 8% Eyewear 129 133 3% 381 436 14% Others / Corporate (2) 73 59 -19% 186 208 12% Standalone 5,733 6,226 9% 14,521
Slide 46: EBIT – Q3'20 and 9M'20
EBIT – Q3’20 and 9M’20 EBIT (in INR Crores) (1) Q3'19 Q3'20 Growth % 9M FY'19 9M FY'20 Growth % Jewellery 651 701 8% 1,436 1,527 6% Watches 54 52 -4% 287 293 2% Eyewear (1) (7) (1) (16) Others/ Corporate (2) (91) (69) (158) (104) Standalone 612 678 11% 1,565 1,701 9% Caratlane (5) 3 (26) (7) TEAL 17
Slide 47: Capital Employed - Standalone
Capital Employed - Standalone in INR Crores Segment Assets Segment Liabilities Capital Employed 31-Mar-19 31-Dec-19 31-Mar-19 31-Dec-19 31-Mar-19 31-Dec-19 Watches 1,502 2,049 453 801 1,049 1,248 Jewellery 6,742 7,469 4,570 4,447 2,172 3,021 Eyewear 394 505 127 256 267 249 Others 107 221 25 71 81 14
Slide 48: Performance Trends
AA »™ y Performance Trends rN
Slide 49: Quarterly Performance Trends
Quarterly Performance Trends Company: Revenue 7,000 50% 6,000 40% 5,000 Rs Crores 4,000 30% 3,000 20% 2,000 10% 1,000 - 0% 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 Net sales 3,867 3,538 4,027 3,488 4,225 3,917 4,319 4,407 5,672 4,672 4,940 4,435 6,20
Slide 50: Quarterly Performance Trends: Watches
Quarterly Performance Trends Watches: Total Income 800 25.0% 700 20.0% 600 500 15.0% Rs Crores 400 10.0% 300 5.0% 200 100 0.0% - -5.0% 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 Net sales 508 503 517 576 539 494 594 676 641 531 715 719 625 Growth (RHS)
Slide 51: Quarterly Performance Trends: Jewellery
Quarterly Performance Trends Jewellery: Total Income 6,000 70.0% 5,000 60.0% 50.0% 4,000 40.0% Rs Crores 3,000 30.0% 2,000 20.0% 10.0% 1,000 0.0% - -10.0% 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 Net sales 3,255 2,913 3,381 2,788 3,576 3,292 3,572 3,
Slide 52: Grammage Growth and Volume Growth
Quarterly Performance Trends Watches: Volume growth 25% 20% 15% 10% Growth (%) 5% 0% -5% -10% -15% 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 Volume Growth 4% 10% 5% 9% 11% -1% 10% 21% 16% 0% 13% -1% -10% Jewellery: Gold price (22kt) and Grammage growt
Slide 53: Annual Performance Trends - Standalone
Annual Performance Trends - Standalone CAGR: 12.5% Income from operations (net) 25,000 20,000 19,070 15,656 15,000 (Rs Crores) 12,999 11,903 11,105 10,000 5,000 0 2014-15 2015-16 2016-17 2017-18 2018-19 CAGR: CAGR: 14% Watches: Net Income 6% Jewellery: Net Income 3,000 18,000 16,030 2,441 16,000 2,5
Slide 54: Annual Performance Trends - Standalone
Annual Performance Trends - Standalone CAGR: PBT CAGR: PAT 14% 2,500 17% 1,600 1,374 1,997 1,400 2,000 1,163 1,662 1,200 1,500 1,000 (Rs Crores) (Rs Crores) 823 1,130 762 1,056 800 698 1,000 888 600 400 500 200 0 0 2014-15 2015-16 2016-17 2017-18 2018-19 2014-15 2015-16 2016-17 2017-18 2018-19 CAGR:
Slide 55: Annual Performance Trends – Standalone
Annual Performance Trends – Standalone Capital Employed 7,000 6,182 6,000 5,194 5,000 4,312 (Rs Crores) 4,000 3,551 3,172 3,000 2,000 1,000 0 2014-15 2015-16 2016-17 2017-18 2018-19 ROCE ROE 40% 35% 35.1% 35.2% 35% 32.6% 29.3% 30% 29.2% 25.4% 30% 24.5% 25.8% 25% 25% 21.1% 19.4% 20% 20% 15% 15% 10% 1
Slide 56: Dividend
Dividend 10 year CAGR: 25% 500 35.0% 450 30.0% 400 350 25.0% 300 20.0% (Rs Crores) 250 15.0% 200 150 10.0% 100 5.0% 50 0 0.0% 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Dividend 44 67 111 155 186 186 204 195 231 333 444 Payout Ratio 27.9% 26.6% 25.8% 25.9
Slide 57: Market Capitalisation
Market Capitalisation 10 year CAGR: 33% Stock Performance Vs Sensex (last 6 months) 120,000 105,465 101,372 100,000 83,656 80,000 Titan (Rs Crores) Sensex 60,000 41,082 40,000 34,801 30,078 22,772 23,300 20,295 20,000 16,916 8,172 0 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 201
Slide 58: Awards and Recognitions
Awards and Recognitions • Titan’s ‘encircle’ program was winner in loyalty program category in Future of Retail Awards 2019. • Titan Company wins the R K Swamy High Performance Brand Award by AIMA • Tanishq wins at Global Marketing Excellence Awards 2019 in the outdoor category for Outdoor and Locat
Slide 59: Sustainability @ Titan
Sustainability @ Titan CSR focus at Titan will continue be driven by broad themes such as upliftment of the underprivileged girl child, Skill development for the under privileged and support for Indian Arts, Crafts and Heritage. We will also support local causes that are supportive of our neighborho
Slide 60: Thank You
Thank You 4 TITAN COMPANY