Titan Company (TITIND) 375

Result Update Rating matrix Rating : Buy Target : 435 Target Period : 12 months Potential Upside : 16% What s changed? Target Changed from 425 to 435 EPS FY17E Changed from 9.2 to 8.9 EPS FY18E Changed from 12.4 to 11.3 EPS FY19E Introduced at 13.6 Rating Changed from Hold to Buy Quarterly performance Q2FY17 YoY (%) QoQ (%) Revenue 2,636.4 2,654.7-0.7 2,782.5-5.2 EBITDA 276.3 201.8 36.9 292.2-5.4 EBITDA (%) 10.5 7.6 288 bps 10.5-2 bps PAT 180.8 146.4 23.5 126.7 42.7 Key financials ( crore) FY16 FY17E FY18E FY19E Net Sales 11,265 12,338 14,024 15,957 EBITDA 945 1,240 1,423 1,691 Net Profit 706 787 1,004 1,206 EPS ( ) 8.0 8.9 11.3 13.6 Valuation Summary FY16 FY17E FY18E FY19E P/E 47.0 42.2 33.1 27.5 Target P/E 54.7 49.0 38.4 32.0 EV to EBITDA 35.1 26.7 23.1 19.3 Price to book 9.4 8.2 7.0 5.9 RONW (%) 20.1 19.4 21.1 21.5 ROCE (%) 23.4 26.5 26.4 27.0 Stock Data Particular Amount Market Capitalisation ( Crore) 33,292.0 Debt (FY16) ( Crore) 113.1 Cash (FY16) ( Crore) 111.7 EV ( Crore) 33,293.4 52 week H/L 445 / 303 Equity Capital ( Crore) 88.8 Face Value ( ) 1 Price performance 1M 3M 6M 12M Titan Company -9.0-9.4 2.4 5.9 PC Jeweller -4.0 15.7 39.2 6.3 TBZ 14.6 14.4 15.4-33.5 Research Analysts Bharat Chhoda bharat.chhoda@icicisecurities.com Cheragh Sidhwa cheragh.sidhwa@icicisecurities.com Hopes pinned on strong festive season... November 7, 2016 Titan Company (TITIND) 375 Titan Company s (Titan) Q2FY17 results were below our estimates on the revenue and PAT front. However, the EBITDA margin was higher than our estimates Q2FY17 sales remained flat YoY to 2652 crore (I-direct estimate: 2955 crore) due to flattish performance of the jewellery segment to 1987 crore (: 1983 crore) and 5.2% decline in the watches segment to 523.7 crore. Jewellery segment revenues remained flattish due to grammage de-growth of 32% amid 21% increase in gold price. The eyewear segment grew 7.6% to 96.2 crore The operating margin improved 290 bps YoY to 10.5% (I-direct estimate 9.9%) while EBITDA grew 36.9% YoY to 276 crore (on a low base in ) vs. our estimate of 294 crore. EBITDA margins were aided by better gross margins from the jewellery and watches segment. Higher gross margins for jewellery segment were on the back of higher studded ratio, which was at 42% in Q2FY17 Though revenue growth remained flattish, an improvement in EBITDA margin enabled the company to report PAT growth 23.5% YoY to 180.7 crore (I direct estimate: 197.2 crore) Looking for jewellery segment to shine in festive season Q2FY17 revenues remained flattish due to the flat performance of the jewellery segment in spite of a weak base in. However, the management indicated that sales during Dussehra to Diwali this year were strong and recorded growth of ~ 40% YoY. The strong performance in the festive season should provide impetus to revenue growth in Q3FY17. Titan has introduced several new collections before the festive season, which, as per the management, have performed well. Enhanced share of studded jewellery to aid margin improvement Titan is looking to improve its studded gold jewellery share to total revenues by enhancing its studded jewellery product portfolio. Higher share from studded jewellery would aid in improving the overall EBITDA margin of the company. H2FY17 likely to be stronger; long term growth story intact The slower growth in H1FY17 is expected to be compensated by higher growth in H2FY17 due to strong festive season sales in Q3FY17 and a weak base (due to jeweller s strike in March 2016). The management indicated that the jewellery industry de-grew ~30% in H1FY17 suggesting tough times for the sector. However, Titan s performance is commendable considering the tough regulatory environment curbing revenue growth for the sector with the management indicting that the company may have gained market share. Also, the government s decision to enhance the limit for golden harvest scheme to 35% of company s networth from the earlier mandated 25% would assist the company s revenue growth. The management is continuing with its strategy of aggressive retail expansion and introduction of newer brands at different price points. The company is also looking at garnering a higher share of studded jewellery, which would aid in margin growth in FY18E and FY19E. We believe Titan would be a beneficiary of the shift from unorganised to organised players owing to its strong brand and pan- India retail presence. We maintain our positive stance on Titan with a revised target price of 435 (based on 32.0x FY19E EPS of 13.6). We have a BUY recommendation on Titan Company. ICICI Securities Ltd Retail Equity Research

Variance analysis Q2FY17 Q2FY17E YoY (%) QoQ (%) Comments Revenue 2,636.4 2,955.5 2,654.7-0.7 2,782.5-5.2 Other Operating Income 15.9 21.6 18.8-15.3 16.3-2.3 Revenues were lower than our estimates owing to the lower-than-expected performance of the jewellery segment. Jewellery segment revenues remained flattish owing to a decline in volumes due to high gold prices. Jewellery grammage de-growth of 32% happened amid a 21% increase in gold price YoY. Watches segment declined 5% with domestic growth of ~ 5%. However, lower exports and restructuring of the services business in watches resulted in an overall decline in revenues for the watches segment Raw Material Expense 1,803.6 2,119.1 1,977.4-8.8 1,974.5-8.7 Employee Expenses 181.6 206.9 180.4 0.7 191.9-5.4 Advertising Expenses 98.1 106.4 89.6 9.4 102.7-4.5 Other Expenses 292.8 251.2 224.3 30.5 237.6 23.2 EBITDA 276.3 293.6 201.8 36.9 292.2-5.4 EBITDA Margin (%) 10.5 9.9 7.6 288 bps 10.5-2 bps Depreciation 26.0 26.8 24.0 8.2 26.1-0.5 Interest 11.7 9.1 8.7 34.4 8.8 33.2 Other Income 11.7 12.5 13.8-15.1 13.4-12.3 The EBITDA margin increased 288 bps YoY due to EBIT margins of jewellery segment increasing 490 bps to 10.98%. The EBIT margin of the watches segment was down 283 bps to 12.28% PBT before Exceptional item 250.4 270.1 182.9 36.9 270.6-7.5 Exceptional Item 3.0 96.9 Exceptional expense relates to one time expenditure on VRS PBT 247.4 270.1 182.9 35.3 173.8-7.5 Tax Outgo 66.7 72.9 36.5 82.5 47.1 41.6 PAT 180.8 197.2 146.4 23.5 126.7 42.7 PAT growth was curtailed owing to higher tax rate Key Metrics Jewellery Revenues ( Crore) 1,987.5 2,219.5 1,982.7 0.2 2,138.3-7.1 Segment EBIT Margin (%) 11.0 6.1 490 bps 9.5 144 bps Watches Revenues ( Crore) 523.7 557.4 552.4-5.2 491.7 6.5 Segment EBIT Margin (%) 12.3 15.1-283 bps 1.9 1041 bps Change in estimates FY17E FY18E FY19E ( Crore) Old New % Change Old New % Change Introduced Comments Revenue 12,881.0 12,338.0-4.2 15,095.0 14,024.5-7.1 15,956.7 EBITDA 1,243.0 1,240.0-0.2 1,517.0 1,423.5-6.2 1,691.4 EBITDA Margin (%) 9.65 10.05 40 bps 10.05 10.15 10 bps 10.60 PAT 821.0 787.3-4.1 1,102.0 1,004.3-8.9 1,205.6 EPS ( ) 9.7 8.9-8.6 12.3 11.3-8.0 13.6 We have revised downwards our revenue estimates for FY17E and FY18E EBITDA margin estimate for FY17 has been revised upwards owing to better margins in H1FY17 ICICI Securities Ltd Retail Equity Research Page 2

Revenue trajectory 18,000 12,000 crore 6,000-10,113 3,088 2,290 2,650 2,787 10,916 2,854 3,565 2,898 2,474 11,903 2,687 2,655 3,398 2,437 11,265 2,783 2,636 12,338 14,024 15,957 Q1FY14 Q3FY14 FY14 Q1 Q2 Q4 Q1FY16 Q3FY16 FY16 Q2FY17 FY17E FY18E FY19E Company Analysis Strong festive season, new collections to boost revenues During FY07-14, revenues grew at a CAGR of 26.6% led by a healthy 31.2% CAGR in the jewellery segment. Revenues increased from 2,090 crore in FY07 to 11,903 crore in. We expect the same to increase to 15957 crore by FY19E, translating to 12.3% CAGR in FY16-19E. During this period as well, we expect the jewellery and watches segment to grow at a CAGR of 13% and 8%, respectively, in FY16-19E. Jewellery revenues in FY17 are expected to be buoyed by GHS redemption, which was absent in FY16 due to regulatory changes. The management indicated that impact of the PAN card rule for purchases above 2 lakh has not yet extensively negatively impacted growth. Consumers are getting used to the new regulatory requirement. Exhibit 1: Divisional performance 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - FY11 Q1 FY17E FY19E Watches Jewellery Exhibit 2: Jewellery segment growth In the jewellery segment, Titan plans to add new products at different price points to capture higher volume growth. The company is also looking at the online channel as another growth engine to engage with customers who prefer the convenience of online buying and spend higher time and money on online purchases. Also, the management is introducing new collections (Zuhur, Shubham) with exquisite designs to attract customers into buying jewellery. The domestic performance of the watches segment in Q2FY17 saw an increase of 5% YoY growth. However, overall revenue of the watch segment declined 5% on account of a decline in exports. Exhibit 3: Watch segment growth % - 80 60 40 20 (20) 43 39 15 46 4 (15) 3 7 63 10 9 FY11 FY12 Q1FY14 Q3FY14 FY14 Q1 Q2 Q4 Q1FY16 (10) (15) (11) 20 Q3FY16 1 (8) FY16 3 0 Q2FY17 % 30 25 20 15 10 5 - (5) (10) (15) 19 4 13 23 20 10 11 (6) 7 20 7 10 19 (2) 2 7 10 5 FY08 FY09 FY10 FY11 FY12 Q1FY14 Q3FY14 FY14 Q1 Q2 Q4 Q1FY16 Q3FY16 FY16 Q2FY17 8 (13) 2 1 (5) ICICI Securities Ltd Retail Equity Research Page 3

Regulatory tightening by the government with the intention of curbing black money could lead to higher compliance from small and unorganised players leading to a level playing field for organised players like Titan resulting in a shift from the unorganised to the organised segment. We expect the company to be a beneficiary of the shift of demand towards the organised segment. Considering its strong brand image and pan-india presence, we believe Titan would be able to double its market share in the Indian jewellery market from the current 5%. EBITDA margin, PAT to improve from FY17E onwards Exhibit 4: EBITDA margin trend % 12 11 10 9 8 7 6 9.5 10.0 9.4 9.4 8.4 8.4 7.8 7.3 11.4 9.3 10.6 9.6 9.6 9.3 9.5 10.9 9.7 9.1 8.6 8.3 8.4 7.6 10.5 10.510.110.2 10.6 FY07 FY08 FY09 FY10 FY11 FY12 Q1FY14 Q3FY14 FY14 Q1 Q2 Q4 Q1FY16 Q3FY16 FY16 Q2FY17 FY17E FY18E FY19E EBITDA Margin Titan s operating margin has fluctuated in the past owing to a changing product mix and also impact of rupee movement in the watch segment. We expect the operating margin to remain in the range of 9.5-10% over the next two years. On a segmental basis, the gold business has relatively stable margins. The share of studded jewellery does tend to bring some variation (as studded jewellery has 3.0x gross margins of plain gold jewellery). Also, in, it introduced a lotus themed collection Niloufer, which was well received by the market. Strategically, Titan is focusing on introducing high margin products and enhancing its studded share, which would enable it to improve its EBITDA margin, going ahead. We expect Titan to grow its PAT at a CAGR of 19.5% in FY16-19E on the back of revenue growth and margin expansion. We expect PAT to increase from 706 crore in FY16 to 1,206 crore in FY19E. Exhibit 5: Net profit trend crore 1,400 1,200 1,000 800 600 400 200-94 150159 250 430 725 600 182187166 206 741 177 240 191 215 823 151146 225 184 706 127 181 787 1,004 1,206 FY07 FY08 FY09 FY10 FY11 FY12 Q1FY14 Q3FY14 FY14 Q1 Q2 Q4 Q1FY16 Q3FY16 FY16 Q2FY17 FY17E FY18E FY19E ICICI Securities Ltd Retail Equity Research Page 4

Key takeaways from annual report FY16 was a challenging year for the company. The company s sales income declined 5.4% while net profit declined 14.2%. This performance came in the backdrop of an environment where the consumer sentiment did not pick up as expected and regulatory measures adversely affected the jewellery business For the watches and accessories division, demand remained sluggish as consumer sentiment remained weak for most of the year. A poor monsoon season also dampened the situation with demand slowing down even in the tier 2 cities. The company launched its first smart watch, Titan JUXT. The initial response was encouraging. The company expects a good growth opportunity in years to come The company believes there is an opportunity for all its brands to introduce technology watches to garner a significant share in one of the fast growing segments today. Favre Leuba, the heritage Swiss brand that the company acquired, is being actively worked on for a launch towards the end of FY17. The product, marketing and distribution strategy is being worked upon by a newly constituted team largely from Swiss watch industry The performance of the jewellery division was dampened on account of various regulations imposed by the government in FY16. The fourth quarter was tough owing to regulatory changes like implementation of PAN card rule for purchases above 2 lakh and industry strike in March 2016 on account of introduction of 1% excise duty that was opposed by the jewellery industry The management believes the worst has played out on the regulatory and competitive fronts and growth trajectory for Tanishq will come back in FY17, aided also substantially by the Golden Harvest Jewellery purchase scheme that is now fully back in place Despite a slowdown in retail, the eyewear segment grew 12% in FY16 over previous year. Over 70 new stores were opened during the year taking the total store count to 402. Over 300 new products were introduced during the year. In sunglasses, Fastrack and Titan Glares continued to do well with Fastrack sunglasses selling over 1.10 million pieces during the year ICICI Securities Ltd Retail Equity Research Page 5

Valuation Titan continues to enjoy premium multiples owing to: Consistent topline growth: While revenues grew at a CAGR of 26.6% during FY07-14, we expect the company to continue to grow at 15.8% CAGR during FY16-18E Strong balance sheet: As compared to other jewellers, Titan is relatively lower leveraged and has a maintained a strong cash balance, which enables it to meet working capital requirements Healthy financials: Despite the continued growth, Titan has managed to remain debt-free considering the nature of its business. Even after the change in gold regulations, the company has very low debt on a net basis. The company has been consistently reporting return ratios in excess of 25-30% in the last 10 years Continuous innovations: Titan has always strived hard to achieve topline growth. To achieve this, it has launched various brands across categories and is working hard towards nurturing these brands. It is also exploring new product categories, which are relatively lower penetrated and striving further to grow Exhibit 6: Valuations Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE ( cr) (%) ( ) (%) (x) (x) (%) (%) FY16 11,264.5 (5.4) 8.0 (14.2) 47.0 35.1 20.1 23.4 FY17E 12,338.0 9.5 8.9 11.1 42.2 26.7 19.4 26.5 FY18E 14,024.5 13.7 11.3 27.6 33.1 23.1 21.1 26.4 FY19E 15,956.7 13.8 13.6 20.0 27.5 19.3 21.5 27.0 Slower growth in H1FY17 is expected to be compensated by higher growth in H2FY17 due to strong festive season sales in Q3FY17 and a weak base (Due to jewellers strike in March 2016)). Titan s management indicated that the jewellery industry de-grew ~ 30% in H1FY17 suggesting tough times for the sector. However, Titan s performance is commendable considering the tough regulatory environment curbing revenue growth for the sector with the management indicting that the company may have gained market share. Also, the government s decision to enhance the limit for golden harvest scheme to 35% of company s networth from the earlier mandated 25% would assist the company s revenue growth. The management is continuing with its strategy of aggressive retail expansion and introduction of newer brands at different price points. The company is also looking at having higher share of studded jewellery, which would aid in margin growth in FY18E and FY19E. We believe Titan would be a beneficiary of the shift from unorganised to organised players owing to its strong brand and pan India retail presence. We maintain our positive stance on Titan with a revised target price of 435 (based on 32.0x FY19E EPS of 13.6). We have a BUY recommendation on Titan Company. ICICI Securities Ltd Retail Equity Research Page 6

Recommendation history vs. consensus estimate ( ) 600 525 450 375 300 225 150 75 0 Oct-14 Dec-14 Mar-15 May-15 Aug-15 Oct-15 Dec-15 Mar-16 May-16 Aug-16 Oct-16 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 (%) Price Idirect target Consensus Target Mean % Consensus with BUY Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Apr-09 Revenue growth slips to single digits after strong 20-30% topline growth. Consequently, operating margin also takes a hit Dec-09 After three slow quarters, revenue growth bounces back to 30-40% in Q3FY10 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 Top 10 Shareholders Rank Name Last Filing Date %O/S Position (m) Change (m 1 Tamilnadu Industrial Development Corporation, Ltd. 30-Sep-16 27.88 247.5 0 2 Tata Group of Companies 30-Sep-16 24.98 221.7 0 3 Jhunjhunwala (Rakesh Radheshyam) 30-Sep-16 6.58 58.4-0 4 Matthews International Capital Management, L.L.C. 30-Jun-16 3.43 30.4-1 5 Khazanah Nasional Berhad 30-Sep-16 1.67 14.8-1 6 Life Insurance Corporation of India 30-Sep-16 1.60 14.2-0 7 Jhunjhunwala (Rekha Rakesh) 30-Sep-16 1.55 13.7 0 8 J.P. Morgan Asset Management (Hong Kong) Ltd. 30-Sep-16 1.37 12.2 1 9 Franklin Templeton Investment Management Ltd. 30-Sep-16 1.35 11.9 11 10 Franklin Advisers, Inc. 30-Jun-16 1.24 11.0 0 Shareholding Pattern (in %) Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Promoter 53.1 53.1 53.1 53.1 53.1 FII 21.6 20.5 19.7 21.7 22.0 DII 3.2 5.7 3.4 4.5 4.3 Others 22.2 20.8 23.8 20.8 20.6 Source: Reuters, ICICIdirect.com Research Recent Activity Buys Sells Investor name Value Shares Investor name Value Shares Franklin Templeton Investment Management Ltd. 70.92 11.95 Matthews International Capital Management, L.L.C. -9.35-1.55 J.P. Morgan Asset Management (Hong Kong) Ltd. 8.71 1.47 Khazanah Nasional Berhad -7.22-1.2 Carnegie Fonder AB 2.79 0.47 Kotak Mahindra Asset Management Company Ltd. -3.88-0.6 Invesco Hong Kong Limited 2.44 0.40 Stewart Investors -2.86-0.5 Franklin Advisers, Inc. 2.06 0.34 Invesco PowerShares Capital Management LLC -2.87-0.46 Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

Financial summary Profit and loss statement Crore (Year-end March) FY16 FY17E FY18E FY19E Total operating Income 11,264.5 12,338.0 14,024.5 15,956.7 Growth (%) -5.4 9.5 13.7 13.8 Raw Material Expenses 8,188.8 8,951.2 10,216.8 11,504.8 Employee Expenses 681.2 740.3 799.4 877.6 Manufacturing Expenses 507.3 505.9 575.0 686.1 Selling Expenses 567.2 592.2 631.1 750.0 Administrative Expenses 374.6 308.4 378.7 446.8 Total Operating Expenditure 10,319.0 11,098.0 12,601.0 14,265.3 EBITDA 945.5 1,240.0 1,423.5 1,691.4 Growth (%) -18.0 31.1 14.8 18.8 Depreciation 96.9 104.0 113.5 125.8 Interest 42.3 56.5 40.7 36.6 Other Income 64.4 57.9 52.1 57.3 PBT 870.7 1,137.3 1,321.4 1,586.3 Exception items 99.9 Growth (%) -17.5 19.2 27.4 20.0 Total Tax 164.8 250.2 317.1 380.7 PAT 705.9 787.3 1,004.3 1,205.6 Growth (%) -14.2 11.5 27.6 20.0 EPS ( ) 8.0 8.9 11.3 13.6 Cash flow statement Crore (Year-end March) FY16 FY17E FY18E FY19E Profit before Tax 870.7 1,037.5 1,321.4 1,586.3 Add: Depreciation 96.9 104.0 113.5 125.8 (Inc)/dec in Current Assets -421.4-522.0-794.3-910.0 Inc/(dec) in CL and Provisions 68.4 70.1 279.8 416.8 Taxes Paid -164.8-250.2-317.1-380.7 Others -5.8 20.5 13.7 16.4 CF from operating activities 444.1 459.8 617.0 854.5 (Inc)/dec in Investments -41.4 7.4 0.0 0.0 (Inc)/dec in Fixed Assets -200.8-122.4-125.0-133.7 Others -38.4 35.8 31.4 23.9 CF from investing activities -280.5-79.2-93.7-109.8 Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0 Inc/(dec) in loan funds 15.3 115.1-19.6-17.3 Dividend paid & dividend tax -235.1-237.9-303.5-364.3 Others -42.3-56.5-40.7-36.6 CF from financing activities -262.1-179.4-363.8-418.3 Net Cash flow -98.5 201.2 159.6 326.4 Opening Cash 210.2 111.7 312.9 472.4 Closing Cash 111.7 312.9 472.4 798.8 Balance sheet Crore (Year-end March) FY16 FY17E FY18E FY19E Liabilities Equity Capital 88.8 88.8 88.8 88.8 Reserve and Surplus 3,425.8 3,975.2 4,678.0 5,520.3 Total Shareholders funds 3,514.6 4,064.0 4,766.8 5,609.1 Total Debt 113.1 226.1 203.5 183.1 Deferred Tax Liability (23.9) (21.7) (19.0) (15.8) Other long term liabilities - - - - Total Liabilities 3,603.7 4,268.4 4,951.3 5,776.4 Assets Gross Block 1,403.1 1,566.2 1,712.6 1,814.1 Less: Acc Depreciation 634.5 738.5 852.0 977.8 Net Block 768.6 827.7 860.6 836.3 Capital WIP 106.1 65.3 43.9 76.1 Total Fixed Assets 874.6 893.0 904.5 912.5 Investments 74.0 66.6 63.3 60.1 Inventory 4,442.2 4,732.4 5,379.3 6,120.4 Debtors 195.1 338.0 384.2 437.2 Loans and Advances 651.3 740.3 841.5 957.4 Other Current Assets 3.7 4.2 4.8 5.6 Cash 111.7 312.9 472.4 798.8 Total Current Assets 5,404.0 6,127.8 7,082.2 8,319.4 Creditors 1,739.2 1,716.7 1,819.4 2,048.8 Other Current Liabilities 819.3 740.3 841.5 957.4 Provisions 190.4 362.0 437.8 509.3 Total Current Liabilities 2,748.9 2,818.9 3,098.7 3,515.5 Net Current Assets 2,655.1 3,308.8 3,983.5 4,803.8 Others Assets - - - - Application of Funds 3,603.7 4,268.4 4,951.3 5,776.4. Key ratios (Year-end March) FY16 FY17E FY18E FY19E Per share data ( ) EPS 8.0 8.9 11.3 13.6 Cash EPS 9.0 10.0 12.6 15.0 BV 39.6 45.8 53.7 63.2 DPS 2.2 2.3 2.9 3.5 Cash Per Share 1.3 3.5 5.3 9.0 Operating Ratios EBITDA Margin (%) 8.4 10.1 10.2 10.6 PBT Margin (%) 7.7 9.2 9.4 9.9 PAT Margin (%) 6.3 6.4 7.2 7.6 Inventory days 137.5 140.0 140.0 140.0 Debtor days 6.2 10.0 10.0 10.0 Creditor days 82.0 70.0 65.0 65.0 Return Ratios (%) RoE 20.1 19.4 21.1 21.5 RoCE 23.4 26.5 26.4 27.0 RoIC* 24.6 27.3 26.9 27.7 Valuation Ratios (x) P/E 47.0 42.2 33.1 27.5 EV / EBITDA 35.1 26.7 23.1 19.3 EV / Net Sales 2.9 2.7 2.3 2.0 Market Cap / Sales 2.9 2.7 2.4 2.1 Price to Book Value 9.4 8.2 7.0 5.9 Solvency Ratios Debt/EBITDA 0.1 0.2 0.1 0.1 Debt / Equity 0.0 0.1 0.0 0.0 Current Ratio 2.0 2.2 2.3 2.4 Quick Ratio 0.3 0.5 0.5 0.6 ICICI Securities Ltd Retail Equity Research Page 8

ICICIdirect.com coverage universe (Retail) CMP M Cap Sector / Company ( ) TP( ) Rating ( Cr) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E Bata India (BATIND) 460 575 Hold 6,825 17.0 15.2 19.2 35.1 39.3 31.1 27.1 22.5 17.7 16.5 18.6 21.8 18.5 15.2 17.4 Shoppers Stop (SHOSTO) 350 400 Hold 3,138 0.2 5.5 5.8 1,466 65.5 61.9 18.5 15.6 14.0 4.2 5.1 5.6 0.4 7.3 6.7 Titan Company (TITIND) 375 435 Buy 33,292 8.0 8.9 11.3 47.2 42.3 33.2 35.1 26.7 23.1 23.4 26.5 26.4 20.1 19.4 21.1 EPS ( ) P/E (x) EV/EBITDA (x) RoCE (%) RoE (%) ICICI Securities Ltd Retail Equity Research Page 9

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com 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 ICICIdirect.com 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 We /I, Bharat Chhoda, MBA and Cheragh Sidhwa, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities is full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover., The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Bharat Chhoda, MBA and Cheragh Sidhwa, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Bharat Chhoda, MBA and Cheragh Sidhwa MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. 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