Titan Q3 Results: Profit Up, Margin Expands

Titan Company Ltd. profit rose and operating performance improved, driven by its jewellery business during the festival quarter.

Net profit rose 13 percent year-on-year to Rs 470 crore for in the ended December, according to an exchange filing. That, however, was lower than Rs 506 crore estimated by analysts tracked by Bloomberg.

Revenue rose 9.4 percent to Rs 6,206 crore compared with the Rs 6,251 crore-estimate. Revenue was aided by a 10 percent growth in its jewellery business to Rs 5,409 crore, accounting for around 80 percent of the company’s top line. Sale of watches, however, fell 2.5 percent to Rs 625 crore amid the consumption slowdown.

“Third quarter was very good for the jewellery business as retail sales of Tanishq grew around 15 percent,” said CK Venkataraman, managing director at Titan. “We still continue to hold our outlook of 11-13 percent [sales growth of jewellery segment] for the second half of the current financial year shared in the last quarter.”

Titan, after the second-quarter earnings, lowered its jewellery sales growth to 11-13 percent for the second half of FY20 from 20 percent earlier as higher gold prices kept buyers away. Gold prices have only increased since then, pushed up by the metal’s ‘safe haven’ status amid the novel Coronavirus outbreak. On Jan 31., the precious metal reached $1,589 for 10 grams, the highest in nearly seven years.

“The company has been slowly and steadily garnering market share from the unorganised space and they have been doing this consistently over the last two years,” Dharmesh Kant, head of retail research at IndiaNivesh Securities, told BloombergQuint. They have also been opening new stores and expanding in tier-II and tier-II cities aggressively, he said.

But its operating performance improved in the third quarter. Earnings before interest, tax, depreciation and amortisation rose 25.7 percent over a year earlier to Rs 735.2 crore while Ebitda margin expanded to 11.8 percent from 10.3 percent, compared to an estimated 11.5 percent.

Shares of Titan rose as much as 8.55 percent after the earnings, compared to a 2.2 percent rise in the Nifty 50 Index.

Kant said the market is such that “wherever the numbers are satisfactory and the stock has a history of good governance and pedigree, they are being rewarded very handsomely”.

Watch| Premium Segment In Watches Grew Close To 22% In Q3, Says Titan’s Venkataraman