Titan Company Ltd. said it delivered “very good growth” in the January to March quarter, aided by the significant recovery in consumer sentiment and demand post demonetisation.
Control on costs along with strong growth in sales and margins boosted the performance, the Tata group company said in an exchange filing. Sales across divisions were good, the maker of jewellery, watches, and eyewear added.
Titan's profit growth slowed to 13 percent in the October to December quarter, dented by the government's decision to legitimise Rs 500 and Rs 1,000 notes on November 8. The company had posted 25 percent profit growth in the first and second quarters of the financial year 2016-17.
Segment-Wise Performance
The jewellery division achieved new milestones both in sales and profits on the back of the launch of its studded jewellery business and a favourable base, Titan added. The retail growth of the Tanishq brand exceeded 40 percent expected at the beginning of the quarter. The jewellery division contributes more than 77 percent of the company's revenue.
The watches division, which provides over 15 percent of the overall revenue, posted healthy growth in sales of domestic watches and spares, according to the company.
The trade channel has recovered from the after-effects of demonetisation and the retail channels also recorded high single digit growth.Titan's Exchange Filing
The eye wear division witnessed a turnaround on account of the revival in sales of sunglasses. Sales of prescription spectacles grew more than 10 percent.
The GST Factor
Titan warned that high tax rate for jewellery under the Goods and Services Tax regime might impact its growth. The GST Council is expected to discuss the tax rates for individual items at its next meeting on May 18-19, as part of the government's efforts to roll out the new indirect tax regime from July 1.
The company however said that it is optimistic of delivering sales growth in the high teens in the coming year.
Share Price Performance
Share prices of Titan surged 40.6 percent from start of 2017. 49 percent of the analysts tracking the company have a ‘buy' rating on the stock, while 27 percent have a ‘hold' rating, according to Bloomberg. The stock is currently trading at Rs 459.25 apiece, i.e, seven percent above its 12-month target price of Rs 429.4 per share.
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