Titan Q1 profit jumps 52.5% on gold price surge, jewellery sales rise 19%

Boosted by rising gold prices, the jewellery and watchmaker reported strong Q1 earnings even as it looks to set up manufacturing in West Asia to support its growing presence in the US market

Indian jewellery and watchmaker Titan on Thursday reported a 52.5 per cent jump in profit for the first quarter ended June, supported by an increase in global gold prices. The company earned ₹10.91 billion ($124.65 million during the quarter, up from ₹7.15 billion in the same period last year. 

The rise in global gold prices - driven by uncertainty in equity markets because of geopolitical and trade worries - played a key role in Titan's performance. Spot gold prices increased by 5.5 per cent over the quarter, as investors fled to safe-haven assets like gold. 

Revenue growth despite cautious spending 

The company's overall revenue rose by 21 per cent to ₹148.14 billion. Although there was no significant increase in customer footfall, Titan reported that like-for-like domestic sales still saw double-digit growth. 

In its July business update, the company explained that many Indian buyers opted for investment-grade gold coins or lighter, lower-carat jewellery due to the higher prices.

 

Jewellery business remains key driver

 

Total sales in Titan's jewellery segment—which includes brands like Zoya, Mia, Tanishq and CaratLane contributes 88 per cent of the company’s overall revenue—increased by 19 per cent during the reported quarter.

 

Despite budget-conscious consumer behaviour, the firm maintained that "trust in gold remains strong among Indian buyers".

 

"Consumer confidence in gold as both adornment and store of value remains intact," said Managing Director CK Venkataraman in a statement.

 

EBIT margin improves

 

The company's earnings before interest and tax (EBIT) margin improved to 11.8 per cent, compared with 9.8 per cent a year earlier. This comes despite earlier concerns expressed by the company's Chief Financial Officer (CFO) Ashok Sonthalia in February.

 

Sonthalia had told Reuters in February that if gold prices continued to rally, "Titan's core earnings margin target of 11 per cent-11.5 per cent could be under threat."

 

Titan’s second-largest business segment, watches, saw a 24 per cent rise in revenue. This was driven by wealthier customers choosing premium timepieces.

 

Plans for overseas manufacturing

 

To support its global expansion, Titan is also looking at settin up a manufacturing base in the West Asia regionas it aims to retain low-tariff access to the US market, where the company has been steadily growing.

 

“We are considering setting up a manufacturing base in the Gulf region to retain low-tariff access to the US market,” Venkataraman told Reuters on Tuesday.