 "titan, titan eyewear, glasses, spectacles,")
Shares of Titan Company dipped nearly 3 per cent to Rs 2,901 on the BSE in Thursday’s intra-day trade after the company reported a weak operational performance with consolidated earnings before interest and tax (EBIT) contracting by 242 bps to 10.0 per cent in June quarter (Q1FY24). In comparison, the S&P BSE Sensex was down 0.27 per cent at 65,606 at 10:11 AM.
Meanwhile, Titan Company reported a lower-than-expected quarterly profit, at Rs 770 crore, as its mainstay jewellery segment was hurt due to surging gold prices, which pushed up costs and eroded margins. Expenses climbed about 29 per cent, outweighing a nea 19 per cent jump in sales to Rs 10,103 crore.
Heightened competitive scenario has led to company lowering its making charges in a bid to sustain market share gains during the quarter. EBIT margins for jewellery segment stood at around 11 per cent (lower than the management’s guidance o f 12-13 per cent).
Also Read
Titan said EBIT margin for Q1FY24, were lower than same period last year due to one-time diamond price inventory gains in Q1FY23 but normalized in the current quarter. Business also undertook investments for growth through aggressive exchange offers, brand building initiatives and pricing rationalization programs to gain market share, the company said in statement.
The management indicated that lower margins during the quarter should not be extrapolated and weakness is not in structural in nature. It expects margins to improve in the ensuing quarters and exit the year with its earlier guidance of 12-13 per cent. Demand continues to remain healthy in July well supported by new buyer growth & market share gains.
Titan continues to be one the fastest growing discretionary companies (four-year CAGR: 21 per cent) in our retail coverage universe. Robust performance in challenging times reaffirms our thesis of long-term market share gains for Titan. Company currently has ~ 7 per cent market share and expects to improve 100 bps each year taking the share t o 10 per cent over the next three years, ICICI Securities said in a note.
Titan Company's Q1FY24 revenue surpassed expectations, displaying strong double-digit growth in all segments. Although EBITDA and adj. PAT missed estimates due to lower margins impacted by seasonality and gold price volatility, the company's four-/five-year Jewellery EBIT CAGR remained robust at approximately 24 per cent/22 per cent, Motilal Oswal Financial Services said.
Management's unchanged Jewellery margin guidance of 12-13 per cent for FY24 indicates confidence in their strategies. With an ambitious plan to grow jewellery revenues by 2.5x by FY27 and a current 7 per cent market share in a sizable INR 4 trillion market, Titan has ample room for expansion, the brokerage firm said in result update.
