Titan Co.'s profit declined 4% in the first quarter of fiscal 2024 due to higher expenses, missing analysts' estimates.
The net profit of the country's largest branded jewellery maker fell to Rs 753 crore in the quarter ended June, according to an exchange filing on Wednesday. That compares with the Rs 913.4 crore consensus estimate of analysts tracked by Bloomberg.
Revenue for the owner of the Tanishq brand rose 26% to Rs 11,897 crore, against the Rs 10,519.3 crore forecast, boosted by double-digit sales growth across key consumer businesses.
Titan Q1 FY24 Highlights (Consolidated, YoY)
Operating profit fell 6% to Rs 1,125 crore, as against an estimate of Rs 1,353.4 crore.
Margin was at 9.5% versus 12.7% on higher expenses. Analysts had forecast it at 12.9%.
Total expenses rose 31% to Rs 11,009 crore. Finance costs increased 68%, while depreciation costs grew 24% over the previous year.
"The jewellery business remained the star performer," said CK Venkataraman, managing director of the company.
Sales of its mainstay jewellery segment, accounting for 89% of revenue, rose 22% year-on-year to Rs 9,755 crore. This excludes bullion sales of Rs 941 crore and Rs 356 crore in Q1 FY24 and Q1 FY23, respectively.
The domestic demand for jewellery grew 20% driven by robust sales during Akshaya Tritiya in April and an attractive gold exchange programme that aimed to tackle consumer uncertainty amid volatile gold rates. The buyer growth was 14% and the average ticket sizes moved up by 6%, as compared with the corresponding period last year, the company said.
Here's how its other segments fared:
Watches and wearables business, which comprise 8% of sales, posted a 16.2% rise in revenue over the previous year to Rs 913 crore.
The eyecare division, comprising 2% of total revenue, saw 11.1% growth in revenue to Rs 203 crore.
The fragrances segment grew revenue by 11% over the previous year, while fashion accessories comprising primarily of women's bags under IRTH and Fastrack brands rose by 14%.
Ethnic wear brand Taneira grew revenue by 81% year-on-year.
In wearables, the Fastrack brand grew the fastest clocking sizeable gains in the portfolio, the company said.
"We are pursuing market share gains across categories and investing in various capabilities and retail network expansion," said Venkataraman.
The company's international foray is also shaping up well, he said.
Of the key subsidiaries, Caratlane Trading Pvt. reported total income of Rs 640 crore, 32% higher than last year driven by gifting campaigns and new collections, while Titan Engineering and Automation Ltd. recorded a 32% dip in total income over the previous year to Rs 61 crore.
"Order booking in the manufacturing business was robust with aerospace industry witnessing all-time high bookings and passenger traffic reaching pre-Covid levels, both domestically and internationally," the company said in a statement.
The automation business, too, had a good order book of Rs 500 crore at the end of the quarter, of which a significant portion is planned for execution in FY24. "This will help the business recover its performance in the remainder of the financial year," according to the company.
The Tata Group company opened 68 stores during the quarter, taking the count to 2,778 across 411 cities.
Within jewellery, it added 18 stores—nine stores of Tanishq and eight stores of Mia by Tanishq. It also opened a Tanishq store in Sharjah, expanding its international presence to seven stores in the region of the Gulf Cooperation Council and one store in the U.S.
Caratlane added 11 stores, taking the total store count to 233 stores spread across 93 cities.
It added five stores in Titan Eye+ whereas metro presence for Fastrack stores were by adding a store each in Delhi and Chennai.
Watches and wearables division added 14 new stores in Titan World, nine in Helios and three stores in Fastrack in the quarter. Overall, this division has a total store count of 1,031, as of June 2023.
Six Taneira stores were opened. It now has 47 stores across 25 cities.
Shares of Titan closed 1.25% lower at Rs 2,964.25 apiece before the results were declared, as compared with a 1.05% decline in the benchmark NSE Nifty 50. The results were announced after market hours.
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