With Dhanteras and Diwali around the corner, Titan is hopeful that its jewellery business will return to double-digit growth in the December quarter, backed by a spike in demand. In order to spur further demand, the firm has come up with several offers for customers, including 25 per cent discount on making charges.
The Bengaluru-headquartered company had earlier informed the stock exchanges its jewellery business grew 7 per cent in the second quarter of FY20, lower than the expected 12-13 per cent.
“The dip in Q2 was entirely led by July due to a sudden surge in gold rates. Also, the wedding season had just ended then which pulled down the entire quarter,” said Sandeep Kulhalli, senior vice-president (Retail & Marketing) at the jewellery division of Titan. “However, we saw a huge spike on Dusshera day and the past four days marking the commencement of Dhanteras and Diwali have also shown amazing traction.”
Dhanteras is considered to be the most auspicious day in the Hindu calendar to buy gold which is followed by Diwali and the peak wedding season that begins in November.
The jewellery segment accounts for over 85 per cent of Titan’s profits. Addition of 21 Tanishq stores in the quarter is also expected to boost footfall, the company said.
The jewellery division has also unveiled a special collection called ‘Virasat’ for the Diwali, which is inspired by the beauty and heritage of Udaipur.
According to experts, the Tata Group company is expected to report higher revenue growth in the coming quarters. “For the second half of FY20, the market outlook for Titan is 18-20 per cent, which is likely to be achieved as gold prices are up 14-15 per cent as compared to last year. So, even if the company achieves volume growth of 2-3 per cent, it is likely to achieve the revenue growth target,” said Priyank Chedda, research analyst, Reliance Securities.
Sales are also likely to gain momentum as gold prices have fallen down about Rs 2,000 per 10 gram in the past few days from a record high of Rs 40,000.
“With Diwali less than a week away, it looks likely that investors will get ample time to buy gold in the range of Rs 38,000 (per 10 gms) as the metal looks steady now,” said Jateen Trivedi, senior research analyst (commodity & currency) at LKP Securities.
Meanwhile, another top gold jewellery seller Malabar Gold & Diamonds has also said it is witnessing a gradual increase in demand. “To ensure that the gold price volatility doesn’t impact consumer sentiment in the festive and wedding season, we have launched a special advance booking scheme that allows customers to book gold price while placing order and get jewellery either at the booked price or prevailing gold price at the time of delivery, whichever is lower,” said Ahammed MP, chairman, Malabar Gold & Diamonds.