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Informist, Tuesday, Feb. 4, 2025

 

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-- Titan Oct-Dec net profit INR 9.90 bln vs INR 10.40 bln year ago
-- Analysts saw Titan Oct-Dec net profit INR 10.77 bln
-- Titan Oct-Dec revenue INR 160.97 bln vs INR 130.52 bln year ago
-- Titan Apr-Dec net profit INR 24.65 bln vs INR 27.58 bln year ago
-- Titan Apr-Dec revenue INR 413.65 bln vs INR 358.57 bln year ago
-- Titan Oct-Dec EBIT INR 15.06 bln, up 1.9% on year
-- Titan Oct-Dec EBIT margin 9.3% vs 11.3% year ago
-- Titan Oct-Dec jewellery ops sales INR 146.97 bln vs INR 118.29 bln yr ago
-- Titan Oct-Dec watches, wearables sales INR 11.28 bln vs INR 9.82 bln
-- Titan: Tanishq net added 11 new stores in Oct-Dec
-- Titan Oct-Dec jewellery ops secondary sales growth 28% on year
-- Titan Oct-Dec jewellery ops same store sales growth at 22% on year

-- Titan Oct-Dec jewellery ops EBIT INR 13.98 bln vs INR 14.32 bln year ago

-- Titan Oct-Dec jewellery ops EBIT margin 9.5% vs 12.2% year ago

-- Titan Oct-Dec watches, wearables EBIT INR 1.11 bln vs INR 550 mln year ago

-- Titan Oct-Dec watches, wearables EBIT margin 9.8% vs 5.6% year ago

-- Titan Oct-Dec domestic jewellery sales robust on festival, wedding

-- Titan: Analog watches ops grew 20% on year in Oct-Dec

 

By Rajesh Gajra

 

NEW DELHI – Jewellery-to-watches-to-eyewear company Titan Co. Ltd. missed the Street view on both top line and net profit for the December quarter. Strong year-on-year rise in jewellery segment sales supported revenue growth, which was the highest in seven quarters. The top line growth, however, came at the cost of the company's operating margin, which contracted sharply, indicating pricing weakness, and higher operating costs, which included a substantial increase in inventory change costs.

 

Titan Co.'s net profit declined nearly 5% on year to INR 9.90 billion. The net profit was much below analysts' average estimate of INR 10.8 billion. The revenue from operations was up 23% on year at INR 160.97 billion, which was notably below the Street view of 170.70 billion.

 

In the December quarter, there was muted growth of 1.9% on year in the earnings before interest and tax of the company, a joint venture between Tamilnadu Industrial Development Corp. Ltd., which holds 27.9% stake, and Tata Group companies, which collectively hold 25%, to INR 15.06 billion. The EBIT margin contracted to 9.3% in the December quarter from 11.3% a year ago.

 

Sequentially, Titan Co.'s net profit jumped up 40% and net revenue from operations was up sharply by 31% in the reporting quarter on the back of a festival-led sales jump in the company's jewellery segment, which made up for 91% of its total revenue during the quarter. "Consumer preference for gold, both as adornment jewellery and a store of value, continued to remain fairly strong," Managing Director C.K. Venkataraman was quoted as saying in an earnings press release.

 

On a consolidated basis, which includes the international jewellery business of the company, Titan Co.'s net profit was down 0.6% on year to INR 10.47 billion, even as EBIT was up 5% to INR 16.27 billion and revenue from operations rose 26% to INR 177.23 billion, for the December quarter. The consolidated EBIT margin, like the standalone EBIT margin, contracted to 9.2% from 11% in the corresponding quarter a year ago.

 

Revenue from the company's international jewellery business was INR 5.69 billion, up 64% on year. The company said this was due to growth in the North America region and new store expansion.

 

Most of the company's operating costs were under control during the December quarter. But on the net balance, it still got hit by increase in the expense item 'Change in inventories of finished goods, stock-in-trade and work-in-progress'. This item, generally termed inventory loss when it is a positive number on the expenses account, soared to INR 26.73 billion, from INR 3.51 billion a year ago.

 

SEGMENTAL PERFORMANCE

Titan Co.'s segments comprise jewellery, watches and wearables, eyecare, and emerging businesses. In jewellery, its mainstay business, the company net added 11 new stores during the December quarter.

 

The jewellery segment saw a 24% rise on year in revenue to INR 146.97 billion, but the EBIT declined 2.4% to INR 13.98 billion, and the EBIT margin contracted to 9.5% from 12.2% a year ago. The contrast in numbers indicated that operating costs were elevated or the pricing was weak.

 

Unlike the strong revenue growth in jewellery, the watches and wearables segment of Titan Co. recorded a lower increase of 15% on year in revenue to INR 11.28 billion in the December quarter. The eyecare segment's revenue increased by 16% to INR 1.94 billion for the quarter. The share in the company's revenue of the watches and wearables segment was 7%, while that of the eyecare segment was 1.2%. The company said the watches and wearables segment revenue growth was primarily on the back of a 20% rise in sales of analogue watches.

 

Interestingly, the contrast with the jewellery segment was also seen in the EBIT and margin performance of these two segments. While the jewellery EBIT was muted and the EBIT margin contracted substantially, the EBIT of the watches and wearables segment doubled on year to INR 1.11 billion and the EBIT margin for the segment expanded to 9.8% from 5.6% a year ago. The eyecare segment's EBIT jumped 50% on year to INR 210 million and the EBIT margin expanded to 10.8% from 8.4% a year ago.

 

At the consolidated level, Titan Co. has two key subsidiaries, CaratLane Trading Pvt. Ltd. and Titan Engineering and Automation Ltd. The revenue of CaratLane, which operates in India and abroad, rose 27% on year to INR 8.80 billion for the December quarter, with the EBIT jumping 60% to INR 820 million and EBIT margin expanding to 11.7% from 9.3%.

 

For Titan Engineering, revenue fell 4.2% on year to INR 2.02 billion for the December quarter. The subsidiary's EBIT, however, increased to INR 250 million from INR 330 million a year ago, and the EBIT margin expanded sharply to 17% from 12.4%.

 

The December quarter bottom line of Titan Co. on a standalone basis was severely hit by the inventory change item. According to the press release, Venkataraman said this was because of the full realisation of custom duty-related losses on the inventory, held at the time of the change in customs duty last year.

 

On Tuesday, shares of Titan Co. ended 0.5% higher at INR 3,597.70 on the NSE. The company released its results after market hours.  End

 

Edited by Rajeev Pai

 

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