Titan Q2 Results: Net Profit Falls On Pre-Closure Of Hedging Contracts, Jewellery Business Grows
An employee hands a 50-gram gold bar to a customer inside a Titan Co. Tanishq jewelry store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Titan Q2 Results: Net Profit Falls On Pre-Closure Of Hedging Contracts, Jewellery Business Grows

Titan Co.’s net profit fell because of pre-closure of hedging contracts even as sales rose for its mainstay jewellery business.

Net profit declined 38% year-on-year to Rs 199 crore in the quarter ended September, the country’s largest branded jewellery maker said in an exchange filing. That compares with the Rs 184-crore consensus estimate of analysts tracked by Bloomberg.

The company recognised a loss of Rs 484 crore due to pre-closure of hedging contracts originally designed against sales. Other expenses nearly doubled to Rs 774 crore.

The owner of ‘Tanishq’ brand and namesake watches saw its revenue fall 3% over a year earlier to Rs 4,318 crore—but higher than the Rs 4,168-crore forecast. Sales in its jewellery segment, which accounts for 80% of total revenue, rose 8.7% year-on-year at Rs 3,837 crore.

The company sold bullion worth Rs 391 crore during the quarter. Its total income is down 11%, excluding the sale of bullion.

The Tata Group company’s earnings before interest, tax, depreciation and amortisation fell 43% year-on-year to Rs 294 crore. Operating margin stood at 6.8% compared with 11.5% a year earlier.

“The recovery that the company has witnessed in the quarter has been very satisfying and the positive consumer sentiment gives rise to hope that the festive period could be good for all the divisions of the company,” CK Venkataraman, managing director at Titan, was quoted as saying in the earnings statement. The company continues to gain market share in its key businesses, he said.

Titan was able to operate most of its stores across all its divisions during the quarter, and customer walk-ins have improved even as social distancing norms continue.

The recovery rate of revenue improved during the quarter:

  • Jewellery: 98%

  • Watches and wearable: 55%

  • Eyewear: 61%

“While the customer sentiment improved substantially in the quarter, there was greater willingness to spend on plain gold jewellery and gold coins rather than pure discretionary items,” the company’s results release said. This, it said, explains why the recovery rates in watches and eyewear and even studded jewellery within the jewellery division were lower.

Titan's shares were trading 1.9% lower after the earnings compared with a 1.4% decline in the Nifty 50 Index.

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