Titan sees good business in fourth quarter of FY17

Recovery in consumer sentiment key reason for sales improvement, it says, ahead of results

In a quarterly update on Tuesday, watch and jewellery major Titan said the demand scenario in the March quarter for the firm had improved and sales across its divisions had been good, pointing to a strong earnings period ahead of its Q4 results. 

The Bengaluru-based major, whose FY16 net sales were Rs 11,277.9 crore, derives 75-80 per cent of its revenues from branded jewellery and the rest from largely watches, eyewear and accessories. It is yet to disclose the date of announcing its Q4 earnings to the stock exchanges.

“Cost control, along with strong growth in the top line and gross margins, will enable the company to show very good growth in the bottom line for the quarter and consequently for the year,” S Subramaniam, chief financial officer, Titan, said."The second half of the year exceeded expectations on all counts despite a serious regulatory impact in the form of demonetisation. The year also saw significant landmarks for the company," Subramaniam said.

While the top line growth rate in 2016-17 is expected to be positive, a year ago Titan posted a 5.3 per cent decline in turnover on the back of stagnation in walk-ins and sales, especially in January and February, 2016, and a strike in March 2016 by jewellers protesting against the imposition of excise. 

The company's activation programmes such as the one in studded jewellery had just begun in December 2015, limiting its contribution to sales that year. The rebound for Titan came in the December quarter, with sales growing 13.9 per cent to touch Rs 3,871.3 crore. The recovery was helped by new collections, well-timed consumer schemes and attractive exchange programmes intended to blunt the impact of the note ban, Subramaniam said. 

While a low base in the year-ago period is expected to aid the growth of its branded jewellery business in the March quarter, the company said that consumer sentiment had recovered during the period, pushing up growth. 

The update comes at a time when consumer goods companies in general have indicated that the January-March period of 2017 has seen the effects of the note ban tapering off. While consumer staples companies are expected to perform better than consumer discretionary firms in the March quarter, analysts say that Titan's just-released quarterly update hints that discretionary categories such as jewellery are also putting the note ban behind them.