Thangamayil Jewellery (THANGAMAYL) Q4 12/13 earnings summary

Executive summary

• FY13 sales rose 35% YoY to ₹1,522.98 crore, while reported PAT fell to ₹29.63 crore, largely reflecting a one-time advertising expense write-off and weaker gross margin.

• Expansion added 11 stores during FY13; 26 branches operated at year-end, supported by rural Tamil Nadu reach and a hub-and-spoke model.

• Focus for FY14 shifted toward consolidating existing outlets, improving stock turnover, reducing leverage, and funding expansion with internal accruals.

Financial highlights

• Revenue from operations was ₹1,522.98 crore vs ₹1,131.30 crore in FY12; other income was ₹1.81 crore vs ₹0.32 crore.

• EBITDA was ₹84.67 crore vs ₹118.06 crore; PBT ₹43.06 crore vs ₹87.35 crore; PAT ₹29.63 crore vs ₹59.06 crore.

• Excluding the ₹28.17 crore pre-tax advertising write-off, comparable PBT was ₹71.23 crore vs ₹87.35 crore in FY12; gross profit margin also declined 250 bps on a comparable basis.

• Gold sales volume reached 4,724 kg vs 4,107 kg; invoices increased to 496,588 from 319,894.

Outlook and guidance

• Target of 50 stores by Dec 2015; plans called for 12 additional Tamil Nadu branches in FY14, with a metro entry to be considered later.

• FY14 priorities include consolidating operations, raising stock turnover, reducing leverage, and using internal accruals for branch expansion.

• Four more FY13-14 branches were being developed after two openings by May 24, 2013; all were expected to open in H1 FY14.

• Lower gold prices after the April 2013 correction were expected to support volumes and bottom-line growth.