Titan Company is expected to report strong September quarter performance largely driven robust growth momentum in the Jewellery segment. Watches and wearables are also expected to be strong growth drivers while other Emerging businesses are shaping well and EyeCare sees a double-digit growth helped by international brands.
The analysts at Kotak Institutional Equities anticipate 27% year-on-year growth in Titan’s recurring jewelry sales, with an EBIT margin of 12.5% . Some softness in gold prices since June and stability thereafter for the last three months helped domestic demand, they said. However, the Jewellery EBIT is to decline about 80 basis points yar-on-year (despite cut in franchise commissions) on account of rationalization of gold rate mark-up, aggressive exchange offers, slightly higher-than-usual studded activation schemes and strong growth in South (low-margin market) said analysts at Kotak.
Anushi Vakharia, Research Analyst, StoxBox also expects about 60 basis point moderation in margins on a annual basis due to an increase in brand-building investments and uptick in consumer offers. However she expects margins to expand sequentially, with the company’s focus on promoting its studded business which has a higher ticket share.
Watches are pegged to report a 15% year-on-year growth while eyewear is likely to see 25% yoy growth aided by store growth as per Kotak analysts. They estimate 12.5% EBIT margin for watches, and 15% EBIT margin for eyewear in 2QFY24. EBIT stands for Earnings before interest and Tax.
Titan’s revenues are estimated to grow at 19% to ₹10369.2 crore. Net profit may decline 1.9% year-on-year due to some pressure in Jewelry segment margins.
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Analysts at Motilal Oswal Financial Services also anticipate revenue growth of 16.9% YoY on account of healthy wedding and high-value studded purchase. Gross profit margins nevertheless may decline with rise in the gold prices. The jewelry segment is anticipated to grow by 19%, with a four-year/five-year revenue CAGR of 27% and 21%, respectively as per MOFSL. They expect net profit growth of 1.8% during Q2.
Meanwhile, analysts remain watchful on international business expansion. As the same will be key monitorable, the management’s outlook for the festive season will also be watched keenly. The Shradh season, that remains inauspicious for gold sales was extended till Q3 say analysts. However festival sales will be key monitorable
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Updated: 03 Nov 2023, 06:46 AM IST