Titan Drops After It Says Weak Jewellery Demand To Impact June Quarter

Titan’s jewellery business contributed 80 percent of its total revenue last financial year. 

Signage of Titan sits at one of its showroom in Bengaluru, India. (Photographer: Anirudh Saligrama/BloombergQuint)
Signage of Titan sits at one of its showroom in Bengaluru, India. (Photographer: Anirudh Saligrama/BloombergQuint)

Shares of Titan Company Ltd. declined as much as 4 percent in early trade today to Rs 850 apiece on sales growth concerns.

The company said its jewellery sales were impacted due to a decline in gold imports in June. A high base last year and a one-off impact of Rs 250-crore sales getting advanced in anticipation of higher goods and services tax rate are also likely to impact the quarter ended June.

The county’s largest branded jewellery maker said the industry witnessed subdued growth in the first five months of 2018 as gold imports fell 39 percent in volume terms. A weakness in the consumer segment also weighed on its sales, it said in its exchange filing.

The fall in gold imports was primarily led by a decline in bullion and adornment during the period, the company said. Titan’s jewellery sales grew 25 percent in the financial year ended March 2018. The segment contributed 80 percent to the company’s consolidated revenue.

The company expects watches to report healthy growth driven by modern retail formats, including e-commerce, new launches, and marketing promotions. It also expects its eye-wear business to pick-up growth.

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Brokerages Optimistic

In a research note, brokerage CLSA said it expects the company’s revenue and net profit to rise 12 percent and 10 percent, respectively, on a yearly basis in the June quarter.

While Goldman Sachs forecasts a revenue and operating income rise of 9 percent and 10 percent, respectively, during the period. The research firm, however, said slower sales growth and adverse regulatory developments could be key risks.

Titan’s stock fell 6.7 percent in the quarter ended June compared to a 5.9 percent advance in the benchmark S&P BSE Sensex.

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