Titan, Kalyan Jewellers' Q4 business updates point to bright prospects

Business updates from Titan Company and Kalyan Jewellers indicate that demand remains steady through the January-March quarter (Q4) of FY24 despite volatile gold prices. Analysts continue to be optimistic about both businesses.

Titan said revenues grew 17 per cent on the back of 19 per cent growth in domestic jewellery with 7 per cent growth in Helios (Watches & Wearables or W&W) and the international portfolio, although eye care revenues declined 1 per cent on a year on year (Y-o-Y) basis. Titan also said emerging business grew 24 per cent with 37 per cent growth in Taneira and 12 per cent in Fashion & Fragrances. CaratLane grew 30 per cent Y-o-Y.

Titan added 29 new stores (Tanishq 11 new stores and Mia 18) with 27 in India and one each in Dubai and Chicago, plus 44 new W&W stores, 11 in emerging business and 10 stores of CaratLane. The total retail presence is now 3,035 stores, despite the closure of eight eye care stores in Q4. The management expects to maintain operating margins given a competitive edge in design and higher ticket size. There is a focus on improving wedding sales contribution in the south.

In its Q4FY24 business update, Kalyan Jewellers echoed similar trends, citing encouraging consumer demand due to an extended wedding and festive season resulting in consolidated revenue growth of 34 per cent Y-o-Y in Q4. The Indian business saw 38 per cent growth while West Asia is expected to report 11 per cent growth and now contribute 14 per cent to revenues. Kalyan added 10 stores in India and two in West Asia, taking the store count to 253. The online platform Candere saw revenue growth of 12 per cent Y-o-Y.

Management says Akshaya Tritiya/Wedding advances are good and plans to add a minimum of 130 showrooms (Kalyan: 80, Candere: 50) in India and six in West Asia and the US in FY25. Kalyan has also got a debt reduction strategy to reduce interest costs by increasing gold metal loans and converting a few owned stores to FOCO (franchise-owned, company-operated) – 68 FOCOs are already in place. These measures could boost operating margins by 30-40 bps, and the focus on servicing millennial demand could set up a long-term runway.

For Titan, the domestic jewellery growth was backed by double-digit growth in footfalls and same-store sales. Growth trends were similar across bullion and studded jewellery. Watches & Wearables domestic business saw revenue growth of 6 per cent with Helios seeing healthy double-digit growth in analogue watches. The eyecare division revenue declined 1 per cent Y-o-Y, the second consecutive quarter of decline. Emerging growth of 24 per cent was driven by Taneira (up 37 per cent) and CaratLane. Fragrances & Fashion reported revenue growth of 12 per cent driven by 18 per cent growth in fashion and 8 per cent in fragrances.

Due to base effects, Titan will see slower growth but it is likely to report Rs 50,000 crore in FY24 revenues and could push the top line to above Rs 75,000 crore by FY26 and it may be able to hold a 12 per cent Ebitda margin. Kalyan could report a little under Rs 19,000 crore in revenues in FY24 and take that to around Rs 28,750 crore by FY26 while maintaining an 8.5 per cent Ebitda margin. The cost of finance may reduce from Rs 290 crore in FY24 to around Rs 240 crore by FY26.