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Informist, Tuesday, Nov. 5, 2024

 

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--Jul-Sept net profit INR 7.05 bln
--Analysts saw Titan Jul-Sept net profit INR 10.17 bln
--Jul-Sept net profit INR 7.05 bln vs INR 9.40 bln year ago
--Jul-Sept revenue INR 132.15 bln vs INR 116.60 bln year ago
--Apr-Sept net profit INR 14.75 bln vs INR 17.17 bln year ago
--Apr-Sept revenue INR 252.68 bln vs INR 228.05 bln year ago
--Jul-Sept EBIT INR 11.28 bln vs INR 13.67 bln, down 17.5% on year
--Jul-Sept EBIT margin 9.1% vs 13.6% year ago, down 458 bps
--Jul-Sept jewellery ops sales INR 107.63 bln, up 26% on year
--Jul-Sept watches, wearables sales INR 13.01 bln, up 19% on year
--Customs duty reduction saw revival in consumer interest
--Tanishq net added 11 new stores in Jul-Sept
--Jul-Sept jewellery ops EBIT INR 9.32 bln vs INR 12.06 bln year ago
--Jul-Sept jewellery ops EBIT margin 8.7% vs 14.1% year ago
--Jul-Sept watches, wearables EBIT INR 1.94 bln vs INR 1.60 bln
--Jul-Sept watches, wearables EBIT margin 14.9% vs 14.7% year ago
--Jul-Sept domestic jewellery sales rebounded after sluggish Apr-Jun
--Watches, wearables ops growth driven by analog watches segment
--Analog watches ops grew over 25% on year in Jul-Sept
--Jul-Sept profitability was depressed on customs duty-related losses
--Confident about competitiveness of co's businesses
--Remain optimistic about performance during Oct-Mar

 

By Anshul Choudhary

 

MUMBAI – Titan Company Ltd reported a 25% year-on-year decline in its net profit in the September quarter as its realisations in the jewellery segment were hit due to a cut in customs duty on gold. This was the company's worst fall in net profit since the September quarter of 2020, when demand was hit due to the COVID-19 pandemic. 

 

The company's net profit during the quarter fell to INR 7.05 billion, significantly below analysts' estimate of INR 10.17 billion. The company took a hit of INR 2.90 billion in its domestic jewellery segment due to lower customs duty, Titan Co. said in an investor presentation after announcing earnings. Finance Minister Nirmala Sitharaman in her Budget speech in July had cut customs duty on gold to 6% from 15?rlier.

 

The company's net profit fell despite higher revenue, which rose over 13% on year to INR 132.15 billion. Its revenue missed analysts' estimate, which predicted the figure at INR 138.38 billion. The rise in revenue was led by its largest business of jewellery, where the demand improved due to lower customs duty. The revenue figure included earnings from sale of gold-ingots worth INR 8.84 billion as compared with INR 17.55 billion a year ago.

 

"The gold rush triggered by custom duty reduction lasted well into mid-September...," Titan Co. said in the presentation. As demand improved during the quarter, the company saw buyer growth of 12% on year and its average selling price rose 10% on year in the jewellery segment. The jewellery segment reported a total income of 107.63 billion in Jul-Sept, up nearly 26% on year.  

 

Within the jewellery segment, its studded jewellery posted 12% growth in sales, but growth was affected due to weakness in large-size solitaire. "Solitaire sales (large size) were impacted as consumers preferred a wait-and-watch approach amidst soft international prices," Titan Co. said. The company's key subsidiary CaratLane reported a nearly 28% rise in total income to INR 8.29 billion in the September quarter.

 

Apart from the jewellery segment, its relatively smaller segment of watches and wearables also contributed to growth. Revenue from the segment rose 19% on year to INR 13.01 billion. Within the segment, sales of analog watches rose 26% on year with growth seen across brands of Titan, Sonata, and Fastrack. While watches had a strong quarter, the company faced a decline in revenue from wearables segment due to lower average selling price despite volume in the segment rising in double digits.

 

The company's revenue growth from its EyeCare segment was weaker than other segments. Total income from this segment rose nearly 7% on year to INR 2.01 billion amid double-digit growth in sales volumes of frames and lenses. However, sales growth in value terms was affected as the company had introduced cheaper options of fashion frames and lenses during the December quarter last year.

 

The company's international business posted strong growth with consolidated total income rising 61% on year to INR 3.05 billion, majorly led by the jewellery business. This was led by an increase in stores across gulf region, the US, and Singapore during the last year, the company said.

 

While all the company's verticals reported growth in sales, profitability took a hit due to the cut in gold customs duty. The company's earnings before interest and taxes declined to INR 11.28 billion, down nearly 18% on year. Its EBIT margin fell to 9.1% as compared with 13.6% year ago.

 

The company's poor performance at the operating level was majorly due to weakness in the jewellery business, where EBIT fell nearly 23% to INR 9.32 billion and EBIT margin fell 540 basis points to 8.7%. The watches and wearables segment was the only category that saw better profitability as the segment's EBIT improved 21% on year to INR 1.94 billion and EBIT margin rose 20 bps to 14.9%.

 

Titan Co. continued to add stores across verticals. It added 11 stores each of Tanishq, Mia, and CaratLane during the quarter in India. Further, it added 18 stores of watches brand Titan and 14 stores of Helios.

 

The company said it was optimistic about the company's performance in the remaining quarters of this financial year. "we are quite confident about the competitiveness of each of our businesses," the company said. On Tuesday, shares of Titan Co. closed 0.3% higher at INR 3,230.25 on the National Stock Exchange.  End

 

Edited by Deepshikha Bhardwaj

 

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