Analyst Concall
High gold cost hits demand but Titan eyes 2-digit growth
This story was originally published at 23:00 IST on 8 May 2025
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--Titan: See some strain on working capital owing to high gold costs
--Titan: Transformed 160 stores in last 2-3 yrs, to renovate 50-60 FY26
--Titan: Bullish on outlook of jewellery business, target 15-20% growth
--Titan: Premature to comment on entry in lab-grown diamond space
--Titan: Market will continue to drop prices of lab-grown diamonds
--Titan: See little impact of rising gold prices on high-value customers
--Titan: Buyer growth more in studded jewellery than gold
--Titan: Revival in demand for small solitaire; pivoted to low carat sizes
--Titan: Continue to aim for double-digit growth in value terms
--Titan: Not raised prices in US yet, watching tariff situation
--Titan: High-end consumers wary of using solitaire as investment
--CONTEXT: Comments by Titan Co mgmt in post-earnings call with analysts
--Titan: Consumers feeling pinch of high price of gold
By Sunil Raghu and Ashutosh Pati
AHMEDABAD/MUMBAI – The management of Titan Co. Ltd. Thursday said that even though customers were feeling the pinch of rising gold prices, it was limited more to buyers going in for smaller value purchases, and that the company may still see double-digit growth in its jewellery business.
"...they are looking for solutions, both in terms of lightweight jewellery, lower character jewellery, as well as probably lower making charge," the company's management said in a post-earnings analyst call Thursday. The management said they would look forward to any fall in gold prices as it would bring them more customers and better margins.
Growth in revenue from the domestic jewellery segment, which houses the company's flagship brand Tanishq, was largely driven by rise in ticket size and 64% growth in the sale of gold coins. Same-store sales in the segment rose 15% on year in Jan-Mar. Contribution from new buyers was slightly down at 52% in the March quarter, as compared with 54% a year ago. High gold prices pushed customers away from studded jewellery and the share of these products in overall sales declined 300 basis points during the March quarter, the company said. The jewellery segment's earnings before interest and tax margin in the March quarter fell 25 bps on year to 11.9%.
The management said the demand outlook has also been driven and influenced by the increasing gold prices, and therefore buyers, demand, and buyer growth have been rather muted. It is not just the relatively low-value customer who is feeling the pinch of high gold prices, the company said it has also begun to see some amount of strain on its working capital.
On the other hand, the management said it sees little impact on the purchase habits of high-end customers, who prefer to buy studded jewellery to wear and not buy gold jewellery or solitaires for investment purposes. And though it is "very difficult" to predict how gold prices would pan out, the management said that they would continue to target high double digit growth, "whether it comes in value, whether it comes out of buyer or ticket size or a combination of the two". It believes that it could achieve 15-20% growth annually in jewellery business for the coming few years.
The company also sees revival in demand for small solitaires from low-value customers and has accordingly moved to low carat sizes from Feb. 14 by launching 9 carat diamonds. On entry into laboratory grown diamond market to encash on the rising opportunity, the company's management said that while a large number of players are entering the segment, it was "premature" for them to comment on entry in this space. At present what they foresee is that market would continue to drop prices of the lab-grown diamonds.
On increasing its presence across the country, the company's management said that while it would focus on having its own presence in just top 10-12 cities, it would maintain and grow its presence beyond 300 towns currently through the franchise model. It is planning to open 40-50 stores and renovate another 50-60 stores to add additional space and uplift experience. The company said it has already transformed 160 of its stores over last two years.
Talking about the proposed tariffs by the Donald Trump administration in the US, a key export market for the company, the management said that to them cost is not a significant factor in that market. "We are waiting, we will watch how the whole situation unfolds, and then basis that, depending on what competition also does, it's quite likely that if tariffs go up, then we will take price increases," they said. End
Edited by Ashish Shirke
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