Titan - A classic specialty retailing play

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Topic: Titan - A classic specialty retailing play

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rohit1889
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Joined: 25/Jun/2011
Location: India
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Posts: 518

Posted: 19/Jun/2013 at 3:19pm

This is the breakup of "other income" as per FY 2012 AR

Interest from staff loans, vendor advances and bank deposits 9305.26
Dividends on long-term, Non-trade investments - Others 0.44
Miscellaneous income 89.79
Other non-operating income 15.91
Total: 9411.40

So its around 100 cr.
I am unable to understand how will the other income fall as mentioned in the article ? It mainly comprises of "Interest from staff loans, vendor advances and bank deposits"

Originally posted by manish_okhade

Whether you like it or not but below is the BEST description of the situation and proper analysis. TIL still paying 5% for leasing cost so now it has to pay approx 5% extra i.e. total 10% interest cost. So incremental cost is 5% more but it will drain the cash and reduce the other income which is currently 10%. TIL can also negotiate better rates with lender, so lets see how it pens out. I am holding it for some more time and once clarity emerges then take a call.

http://www.thehindubusinessline.com/features/investment-world/titan-industries-buy/article4817712.ece

If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.

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rohit1889
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Joined: 25/Jun/2011
Location: India
Online Status: Offline
Posts: 518

Posted: 19/Jun/2013 at 3:26pm

Sorry. My mistake. In the Cash flow stmt, "Interest income" is 93 cr out of total "Interest from staff loans, vendor advances and bank deposits" of 93cr. So there are no vendor advances. Titan will loose this intrest income as it will use this cash to finance its working capital. Is it right ??

Originally posted by rohit1889

This is the breakup of "other income" as per FY 2012 AR

Interest from staff loans, vendor advances and bank deposits 9305.26
Dividends on long-term, Non-trade investments - Others 0.44
Miscellaneous income 89.79
Other non-operating income 15.91
Total: 9411.40

So its around 100 cr.
I am unable to understand how will the other income fall as mentioned in the article ? It mainly comprises of "Interest from staff loans, vendor advances and bank deposits"

http://www.thehindubusinessline.com/features/investment-world/titan-industries-buy/article4817712.ece

If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.

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manish_okhade
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Joined: 20/Oct/2008
Location: India
Online Status: Offline
Posts: 1997

Posted: 19/Jun/2013 at 3:35pm

Yes, definitly some drain will be there. Few hopes are as below [repeated]

1) Additional interest cost is a swap i.e. 4-5% more than lease cost. One wishful thinking is that TIL may negotiate it well with a banker and get the loan at lower cost. TIL is a sound business, no bank will hesitate to fall in long term contract at lower rate.

Also 180 days working capital or short term loan is needed not a long term debt necessarily.

2) VAT is 1% whcih other players dont have on Gold import

3) Ability to pass on some small hike to consumers

4) Going ahead - Falling gold price will increase volume

Hedging would be tricky and may spoil the shows occassionaly though.

All in all definitly a short term headwind with a long term tail wind.

Edited by manish_okhade - 19/Jun/2013 at 3:37pm

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manishwithted
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Joined: 28/Sep/2010
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Posts: 285

Posted: 19/Jun/2013 at 3:46pm

At this price if one is investing with a view / hope that rbi/govt will withdraw the guideline prohibiting leasing of gold, then it may be OK , otherwise in present condition with reduced ROCE the business model is not as attractive and there is a likelihood of PE downrating (further). Also there is opportunity cost. Unless the CAD comes down it is unlikely that rbi will withdraw the measure.

Long term thinking improves short term decision making - Brian Tracy

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karn
Senior Member

Joined: 05/Apr/2010
Online Status: Offline
Posts: 798

Posted: 01/Aug/2013 at 10:31am

Nice to see some strategies working out Manish okhade. Are you still holding or planning to take profits out? Im asking since plunging was done around or sub 200. Im thinking we should while keeping in mind of special situations like Maruti LIC etc has reverted back.

“Invert, always invert.”

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manish_okhade
Senior Member

Joined: 20/Oct/2008
Location: India
Online Status: Offline
Posts: 1997

Posted: 01/Aug/2013 at 10:54am

Karn,

All past special situations like MARUTI, LIC HF, INFOSYS were trading bets. I cashed out after recovery. Though i regret selling INFY because NRN taking over it was something i never thought of while selling it :-(. NRN is a magician, he will bring it back to track.

BUT, TIL is a investment. I am holding it. I will increase or decrease it based on how much clarity comes out in next 1-2 qtrs. Following is what visible to all:

1) RB has lifted the ban of leased gold loan. Capital model now will not undergo huge change as anticipated before.

2) Gold price crash has helped TIL to gain huge volume. It will continue, i will monitor till Q3 results if all looks well then in all means TIL will get rerated or otherwise.

In short, TIL is a fabulous business to own. It was quite funny to see how people have reacted to news. Even after taking huge debt, ROCE would have hlaved but one should have seen how many companies are generating even TIL halved ROCE in such most near death time for a equity!!!!

My next trading bet is IDFC, I will post it shortly.

Edited by manish_okhade - 01/Aug/2013 at 10:58am

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rohit1889
Senior Member

Joined: 25/Jun/2011
Location: India
Online Status: Offline
Posts: 518

Posted: 16/Aug/2013 at 5:48pm

http://www.moneycontrol.com/news/business/interest-fee-to-go-up-jewellery-ebit-wont-be-hit-titan_936164.html

Back to square one. Now they can't even import in their license as they will then have to export 20%

If you're prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won't get bored.

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manish_okhade
Senior Member

Joined: 20/Oct/2008
Location: India
Online Status: Offline
Posts: 1997

Posted: 16/Aug/2013 at 8:26am

Originally posted by rohit1889

Back to square one.

How long? Not till we eternity for sure. No business is immune from Govt policies. Take ITC, its a solid stock but fall like needle if somebody in north block decides to hike excise duty more than mkt anticipate. Point is that one has to believe in mgmt that they will figure out the way for such short term issues. If investors are fine to wait in HAWKINS where mgmt is trying to solve the simple issues for past 3+ years then TIL too definitly deserve a better treatment :-).

TIL is offering bonanza offer to enter for long term investors [3+ yrs] but a clear exit sign for traders. One has to decide whether one is long or short.

Edited by manish_okhade - 16/Aug/2013 at 8:27am

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