Q2 Results: Titan’s Profit Misses Estimates, Margin Shrinks

Titan Company Ltd. reported its lowest quarterly profit growth in over two years.

Net profit rose 3 percent in the July-September quarter to Rs 314.4 crore compared with the year-ago period, the country’s largest branded jewellery maker said in an exchange filing. That compares with the Rs 367-crore consensus estimate of analysts tracked by Bloomberg. Net sales rose 26 percent to Rs 4,406 crore, while analysts estimated it at Rs 4,143 crore.

Earnings before interest, tax, depreciation and amortisation rose 5 percent year-on-year to Rs 466 crore, in-line with the estimated Rs 421 crore. Operating margin contracted 210 basis points to 10.6 percent.

Growth in profit before tax was muted due to a provision of Rs.29 crore for investments made as part of treasury operations in inter-corporate deposits in Infrastructure Leasing & Financial Services group, the company said in a statement.

“The company has borne an inventory loss, a one-time franchisee compensation in jewellery segment and made provisions due to their exposure to IL&FS group,” said Amnish Aggarwal, research analyst at Prabhudas Lilladher. “These numbers have factored in an otherwise good profit figure.”

Segment Highlights (Year-On-Year)

• Jewellery sales grew 28.5 percent to Rs 3,582 crore.
• Sales of watches rose 17.4 percent to Rs 676 crore.
• Eyewear sales grew 20 percent to Rs 120 crore.

Shares of Titan fell 0.3 percent to Rs 847.65 apiece at close, ahead of the earnings announcement.