Weak Demand, High Gold Prices To Weigh On Titan’s First-Quarter Earnings
Titan expects its jewellery business to grow 13 percent on a yearly basis in the quarter ended June.
Titan Company Ltd., India’s largest branded jewellery and watchmaker, joins consumption-oriented peers predicting a muted first quarter as Asia’s third-largest economy faces a slowdown.
A “tough macro-economic environment” has impacted consumption and rising gold prices in June further deterred customers from buying jewellery, Titan said in a statement.
Marico Ltd., the maker of Parachute hair oil and Saffola vegetable oil, and soaps-to-hair-dye company Godrej Consumer Products Ltd. too highlighted muted demand in the last quarter. Auto sales have been falling since Diwali festival season last year, prompting production cuts. While monsoon was expected to boost volumes in the second half of the fiscal, delayed rains could hurt output. And lack of any stimulus in the Budget has only made markets jittery.
Titan expects its jewellery business, which contributes more than four-fifths to its consolidated revenue, to grow 13 percent on a yearly basis in the quarter ended June. That compares with a 23 percent growth in the entire previous fiscal.
It targets 22 percent growth this fiscal, according to Motilal Oswal. Sales on Akshay Tritiya were robust but increase in gold prices dented consumer sentiment, Titan said in its statement. It added 12 Tanishq jewellery stores in the quarter.
The watches division, which contributes 13 percent to the top line, saw its revenue rise 19 percent in the first quarter—it rose 15 percent in the previous fiscal. The first-quarter jump was partly aided by a large order from Tata Consultancy Services Ltd., India’s most valuable company.
E-commerce continued to drive growth for the watches segment. Eyewear category saw 13 percent growth in April-June against 23 percent rise in the FY18.
