Titan stock dips 4% on disappointing jewellery biz growth in June quarter

High gold prices (20% growth YoY) had an impact on consumer demand. Coupled with lower wedding days, overall sentiments were relatively muted in comparison to Q1FY24, the company said.

Shares of Titan Company dipped 4 per cent to Rs 3,138.10 on the BSE in Monday’s intra-day trade after the company reported a disappointing growth in jewelry business for the April-June quarter of the financial year 2024-25 (Q1FY25).

In Q1FY25, jewellery domestic operations grew around 8 per cent year-on-year (YoY) (ex-bullion) (vs. 19 per cent in Q4FY24 and 19 per cent in Q1FY24), driven by an increase in average selling prices.

The auspicious week of Akshaya Tritiya witnessed double-digit growth (in Tanishq secondary sales) compared to the same period last year. However, high gold prices (20 per cent growth YoY) and continued firmness had an impact on consumer demand. Coupled with lower wedding days, overall sentiments were relatively muted in comparison to Q1FY24, Titan said in its Q1FY25 quarterly business update.

 

Domestic growth came largely through an increase in average selling prices whereas buyer growth was in low single digits, it added.

Meanwhile, Titan in its FY24 annual report said, the sudden spikes in gold rates could see temporary softening of customer demand. There is a likelihood of gold prices remaining elevated through the year, given the geopolitical uncertainties and elections across several countries and a weak global economic outlook.

The division will continue to prioritise an aggressive growth strategy with strong investments in retail expansion, store inventory, exciting new collections, and visible marketing campaigns. Volatility in consumer demand may continue due to macroeconomic forces, but in FY25 as well as in the medium term the jewellery market opportunity is excellent, driven by formalisation, India’s GDP growth and significant headroom for market share gains, the company said.

Titan is a joint venture between the Tata Group and Tamil Nadu Industrial Development Corporation Limited (TIDCO).

As on March 31, 2024, the Tata Group and TIDCO held 25.02 per cent and 27.88 per cent stakes, respectively, in Titan, while the rest is held by institutional investors and the public. Titan is the market leader in the domestic branded jewellery industry (with brands like Tanishq, Zoya, Mia and Caratlane) and in the domestic wristwatches segment (with brands including Titan, Fastrack, Sonata and Xylys).

Favourable  long-term  growth  prospects  for  organised  jewellery  retailers–Increasing  regulations  in  the  jewellery  retail industry, aimed at improving transparency and standardisation over the recent years, have accelerated the shift in the market share from unorganized to organized players. The industry tailwinds are expected to benefit the organised jewellery retailers like Titan over the medium term, supported by its strong brand equity and increasing retail presence, according to analysts.