Titan Q2 Results: Profit Falls 23%, Misses Estimates

Titan Co.'s consolidated net profit declined 23% in the second quarter of the current financial year, missing analysts' estimates.

The luxury products manufacturer's profit fell to Rs 704 crore in the July–September period, according to an exchange filing on Tuesday. Analysts tracked by Bloomberg had shared a consensus estimate of Rs 969 crore.

• Revenue up 16% to Rs 14,534 crore versus Rs 12,529 crore. (Bloomberg estimate: Rs 13,425 crore).

• Ebitda down 12% to Rs 1,236 crore versus Rs 1,411 crore (Estimate: Rs 1,566 crore).

• Margin narrows 280 basis points to 8.5% versus 11.3% (Estimate: 11.7%).

• Net profit down 23% to Rs 704 crore versus Rs 916 crore (Estimate: Rs 969 crore).

Titan reported strong growth across its key business segments, driven by a rebound in domestic demand, particularly within the jewellery segment.

Jewellery revenue saw a 15% growth, reaching Rs 12,771 crore, with a 25% jump in domestic income to Rs 10,568 crore. A surge in demand, spurred by a reduction in customs duty on gold, bolstered buyer growth by around 12% and improved average selling prices by 10%.

The gold segment, including coins, grew nearly 30%, while the studded jewellery category rose 12%. CaratLane also contributed significantly, with revenue jumping 28% to Rs 829 crore, and studded jewellery sales surging by 41%.

The watches and wearables segment delivered a solid 19% revenue increase to Rs 1,304 crore, primarily driven by the analog watch category, where the Titan brand itself grew 32%.

Premiumisation continued to gain traction, evidenced by a 43% growth in the Helios channel, indicating robust consumer preference for premium brands. However, the wearables segment faced pressure on average selling prices, resulting in a 13% revenue decline despite double-digit volume growth.

Titan's Eyecare segment registered a 7% growth in revenue to Rs 202 crore, driven by healthy double-digit volume growth in frames and lenses, although sunglasses saw a seasonal dip. Notably, premiumisation in this segment was reflected in a 53% increase in sales of international brands, with lenses and frames seeing a good uptake.

In emerging businesses, Taneira grew by around 12% with the addition of new stores, expanding its footprint to 81 locations in 41 cities. The Fragrances segment saw revenue rise of 19%, led by a strong 26% growth in Skinn, supported by a 27% jump in volume, indicating steady consumer interest in Titan's expanding lifestyle offerings.

In its Q2 earnings call, Titan management highlighted a temporary hit to margins due to specific challenges, including a one-time customs duty loss, a lower mix of studded jewellery and reduced demand for large-carat solitaire diamonds due to international supply pressures.

While demand for non-solitaire diamonds remains steady, margins for the current financial year are projected to be within the range of 11–11.5%. Despite challenges in the high-end segment, buyer growth in studded jewellery is strong, with ticket sizes in gold remaining stable, though solitaires have seen a dip.

Titan is closely monitoring the lab-grown diamond market, noting that demand declines if jewellery prices exceed Rs 1 lakh. While the company has not yet launched lab-grown diamond offerings, management indicated readiness to enter the segment when the time is right, given market conditions.

The management also pointed out that Trent's entry into lab-grown diamonds reflects the growing significance of this segment, as Trent's diversified retail presence makes it a strong fit for this market.

Titan expects a better performance in the second half of the fiscal, with a focus on mitigating current margin pressures. The company remains vigilant on evolving consumer preferences and demand trends, especially in the jewelry and diamond segments, as it explores future growth opportunities.

Shares of Titan closed 0.25% higher at Rs 3,230.25 apiece on the NSE, compared to a 0.91% advance in the benchmark Nifty 50. The results were declared after the market hours.