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Informist, Monday, Nov. 4, 2024

 

By Anand J.C.

 

MUMBAI – Titan Company Ltd. is expected to have benefitted from a revival in jewellery demand in the September quarter, according to analysts. It is also expected to report healthy growth in its other business segments, including watches and wearables, in the quarter. However, the performance of its eye care business is expected to have been muted in Jul-Sept, analysts said.

 

Titan is expected to report a standalone net profit of INR 10.17 billion in the quarter, as per an average of eight analyst estimates. While net profit is expected to be 8.1% higher than the INR 9.40 billion reported in the September quarter last year, it could be 32.0% higher than the INR 7.7 billion reported in the June quarter.

 

Emkay Global Financial Services Ltd. expects Titan's profit in September to dip 23.0% on year to INR 7.22 billion on account of a loss of INR 1.9 billion expected from hedging, caused by the 900 basis point cut in customs duties on gold imports.

 

Titan's revenue from operations is expected to be INR 138.38 billion in the September quarter, according to an average of eight brokerage views. Top-line predictions vary widely amongst the brokerages, with Centrum Broking Ltd. expecting as high as INR 157.68 billion and Kotak Institutional Equities projecting as low as INR 119.20 billion.

 

On average, the Tanishq-maker is expected to post a healthy 14.8% growth in the top line sequentially for Jul-Sept, 18.7% higher than INR 116.60 billion reported in the same quarter last year. "Demand tailwind has (been) observed led by new product launches, premiumisation, and consumer offers to maintain persistent strong footfall," Centrum said in a report.

 

Titan's earnings before interest, tax, depreciation, and amortisation in the September quarter are expected to be INR 15.87 billion, as per an average of seven brokerages' estimates. Amongst the seven, Nuvama Wealth Management Ltd. expects Titan to report the lowest operating profit in the September quarter at INR 14 billion, while Centrum's forecast is the highest at INR 18.60 billion. On average, Titan's operating profit is expected to be 22.7% higher on year and 32.1% higher sequentially.

 

JEWELLERY SHINES

Analysts expect Titan's jewellery segment to improve sequentially and on year owing to higher demand after a soft June quarter. Titan's jewellery business grew 26.0% on year in the September quarter, the company had said in its quarterly update. The cut in customs duty on gold imports to 6.0% from 15.0% aided the surge in demand, the company said. Like-for-like secondary sales growth for Titan's domestic jewellery business was in the mid-teens in the September quarter.

 

Demand for jewellery remained robust after the customs duty cut as some marriage shopping was brought forward, Prabhudas Lilladher Pvt. Ltd. said. "As per our interactions, we understand there was a moderation in demand during September due to a spike in gold prices," Antique Stock Broking Ltd. said in a note.

 

Kotak Equities expects a 300 bps drop in the salience of studded jewellery to 30.0% in the September quarter due to pent-up demand for gold and underlying weakness in studded jewellery sales, it said in a report. Kotak Equities expects like-for-like recurring standalone jewellery operating profit margin to decline 80 bps on year in the September quarter. This is due to a decline in the share of studded jewellery and a marginal fall in diamond prices, it said. The impact of ongoing rationalisation of the gold rate mark-up, higher investments in the gold exchange programme, and other promotional offers would be largely offset by intermittent easing of competitive pressure following the import duty cut, the brokerage said in a report.

 

Titan's watches and wearables segment grew 20.0% on year in the September quarter while its eye care business grew 6.0% on year, Titan said. Titan's emerging business grew 14.0% on year in the September quarter, the company said. CaratLane business grew 28.0% on year in the quarter on activations and healthy growth in brand searches, the company said.

 

At 1417 IST, shares of Titan traded at INR 3,207.55 on the National Stock Exchange, down 2.6%.

 

Following are the Jul-Sept consolidated earnings estimates of Titan, in INR million, based on reports compiled by Informist from eight brokerages:

 

Brokerage	Net sales	Net profit	Net EBITDA
Antique Stock Broking Ltd.	145,757	10,825	15,839
Centrum Broking Ltd.	157,680	11,889	18,606
Emkay Global Financial Services Ltd.	127,336	7,224	14,699
Kotak Institutional Equities	119,206	10,096	15,175
Motilal Oswal Financial Services Ltd.	144,275	10,830	16,426
Nuvama Wealth Management Ltd.	123,622	8,870	13,996
Prabhudas Lilladher Pvt Ltd.	141,086	10,929	16,366
Sharekhan Ltd.	148,090	10,660	--
Average	138,382	10,165	15,872

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

 

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