Titan slips 3%, hits over three-month low on weak March quarter results

Titan's jewellery division's revenue growth trajectory disappointed due to the dual impact of Omicron Covid variant in Jan and a sharp rise in gold prices in March deferring customer purchases.

Shares of Titan Company hit an over three-month low of Rs 2,309, down 3 per cent on the BSE in Wednesday’s intra-day trade after the company reported a 7.21 per cent year on year (YoY) decline in its consolidated net profit at Rs 527 crore in the fourth quarter ended March 2022 (Q4FY22).

The stock of the Tata group firm was trading at its lowest level since January 27, 2022. In the past one week, it has underperformed the market by falling 9 per cent as compared to a 0.87 per cent decline in the S&P BSE Sensex.

The company’s total income rose 3 per cent to Rs 7,352 crore as against Rs 7,169 crore in the corresponding quarter last year. Higher operating expenses resulted in EBITDA declining by 3 per cent YoY to Rs 794 crore. EBITDA margins declined 70 bps YoY to 10.2 per cent.

As guided by the management in its pre-quarterly update, the jewellery division (excluding gold bullion sale in both the quarters) reported a 4 per cent YoY revenue de-growth.

Titan’s jewellery division’s revenue growth trajectory disappointed due to the dual impact of the Omicron Covid-19 variant in January and a sharp rise in gold prices in March deferring customer purchases.

Jewellery business reported an EBIT (earnings before interest and tax) of Rs 780 crore (before exceptional items) in Q4FY22 compared to Rs 703 crore in the same quarter of the previous year.

"Despite frequent disruptions in the quarter owing to Covid wave 3 and other geo-political factors, the quarter has been satisfactory in terms of growth and profitability. The company is well prepared and looking forward to an exciting Q1 with all its stores ramped up for a much-awaited Akshaya Tritiya festival this year. With international expansion in GCC markets and the first Tanishq store coming up in the US, we are gearing up to touch new horizons in FY23,” said CK Venkataraman, Managing Director of the company.

"Robust performance in challenging times reaffirms our thesis of long term market share gains for Titan. Titan has, over the years, withstood challenges and emerged as a resilient player," said ICICI Securities.

The brokerage believes that Titan is a structural growth story and appears to be a key beneficiary of the unorganised to organised shift in the Indian jewellery market.

Meanwhile, CRISIL Ratings has reaffirmed its 'CRISIL AAA/Stable/CRISILA1+' ratings on the bank facilities of Titan.

The ratings continue to reflect Titan’s leadership position in the jewellery and watches segment, healthy operating efficiency and a strong financial risk profile with robust liquidity. These strengths are partially offset by the company’s exposure to regulatory risks in the jewellery division and high competitive intensity in the sector, the rating agency said in a rationale.