Titan upbeat on topline growth
Despite macroeconomic challenges, the watches-to-jewellery maker posted impressive performances in jewellery segment last month; Predicts demand to pick up on consolidation of bullion prices
Titan shares tank over 2% after Q1 earnings
Bengaluru: The watches-to-jewellery maker Titan is hopeful of good growth in its top line during the current financial year despite macroeconomic challenges like high inflation and volatile gold prices.
In the post results conference call, the management of the company said that April performance in the jewellery segment was impressive and it hoped the demand environment to continue as volatility in gold prices recede.
"Gold prices volatility has affected big ticket purchases, especially wedding. This was particularly in March and to some extent in April. Having said that we are very happy with our April top line and we are expecting that now, demand to pick up as gold prices consolidate. There are a lot of weddings. With Akshya Tritiya & weddings coming up (after two years), we are seeing a good traction," said Managing Director of Titan, CK Venkataraman in the conference call.
Jewellery is the most important business segment of Titan contributing close to 90 per cent of its total revenue. The company is increasingly tapping the market in small cities through opening up Tanishq.
"From competitors' point of view, we continue to be strong in the segments we operate. We are very much satisfied with April performance and confident that we will achieve the target, we have set for the whole year," Venkataraman said. He also added that there is a huge headroom for growth of its all businesses and the company has ambitious targets in mind.
Pandemic-related restrictions and volatility seen in the gold prices resulted in Titan reporting a 7.7 per cent year-on-year decline in standalone net profit to Rs491 crore during the January-March quarter. The company's revenue during the fourth quarter grew marginally at 2 per cent to Rs 7,276 crore.
The jewellery business registered a YoY decline of 4 per cent in its income of Rs6,132 crore (excluding bullion sale) during the fourth quarter. However, analysts remained bullish on the growth prospects of Titan given the unorganised nature of jewellery business in India.
"There are uncertainties on margin sustainability and demand given gold price volatility. Except for this quarter (which includes one-offs), Titan has delivered on margins. And we do not see incremental developments to believe margins will contract ahead. Even on growth outlook, April demand has already recovered, while price-related volatility in the past has evened out soon," Edelweiss wrote in a note.
