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Informist, Wednesday, Feb. 5, 2025

 

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--Titan:Hope to maintain jewellery ops EBIT margin 11-11.5% on annual basis 
--Titan: High gold prices a drag on studded jewellery ops growth 
--CONTEXT: Titan management's comments in post-earnings analyst call 
--Titan: To expand Taneira brand stores, focus on metros, tier-I cities 
--Titan: Rising gold prices extremely challenging now 
--Titan: Appropriate to chase growth instead of margins 
--Titan: Caratlane, Mia brands attracting new age customers

 

By Narayana Krishna and Simran Rede

 

HYDERABAD/MUMBAI - Titan Co. Ltd. expects to maintain around 11.0-11.5?rnings before interest and tax margins, or EBIT margins, in its jewellery business for 2024-25 (Apr-Mar), the company's management said in a post-earnings conference call Wednesday.

 

For the December quarter, the company reported jewellery operations EBIT margin of 9.5% against 12.2% a year ago. Attributing the on-year fall in margin to losses related to tax changes on inventory, the company said annualised margins will be at a guided level going forward.

 

However, the company is more focused on achieving revenue growth instead of improving margins, the management said. For Oct-Dec, Titan's net profit declined nearly 5% on year to INR 9.90 billion. The net profit was much below analysts' estimate of INR 10.80 billion. The revenue from operations was up 23% on year at INR 160.97 billion, which was below the Street view of INR 170.70 billion.

 

Titan's management said rising gold prices is a challenge for the company now, and it has become difficult to predict the possible growth in this segment in Jan-Mar. The company said gold prices are fluctuating on a daily basis, affecting sales in segments such as studded jewellery.

 

For the December quarter, Titan reported 22% on-year growth in same-store jewellery sales and 28% growth in secondary sales led by festivals and wedding demand. The demand for jewellery was good during the initial weeks of January, but it has become uncertain in recent weeks, given the weakness in the rupee and other global events including tariff threats from the US, the management said.

 

Titan's management said the gold lease rates have also increased in the last one month and there is a supply issue which banks are trying to address. The company said it may take another one or two months to understand how the gold supply and pricing would play out.

On geography wise growth trends, Titan said the southern and eastern parts of India have grown faster than the overall nation. In the northern part of the country, growth was subdued earlier, but now it has experienced a strong bounceback, while western India has seen mixed growth. 

 

STRATEGY CHANGE

The retailing major said it is changing the strategy for its Taneira brand stores and wants to focus more on metros and tier-I cities rather than small towns. The company said the growth was flat for Taneira due to the absence of new store launches. Titan opened only one new store during the December quarter.

 

The management said flat growth in the December quarter was also due to higher inventory in some stores. Titan said the company has introduced several new product categories in saree and non-saree segments in the Taneira brand segment, which would take time to pick up. The company has 82 stores under the Taneira brand across 42 cities in the country.

On changing patterns in buyers, the company said it is witnessing more new age customers at its CaratLane and Mia branded outlets. It added 19 new CaratLane stores in the latest quarter, taking the total store count to 305. Under the Mia brand, it has 220 stores.

According to the company's presentation, Titan's total store count is 3,240 as of Dec. 31, covering 431 cities and spread across 4.6 million square feet of retial space.

At 1022 IST, shares of Titan traded at INR 3508.70 on the National Stock Exchange, down 2.5%.  End

 

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

 

Edited by Tanima Banerjee

 

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