Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Titan Co Ltd (BOM:500114, Financial) reported an overall growth of around 9% for the quarter.
- The company plans to expand its jewelry stores, targeting 40-50 new Tanishq stores and 70-80 Mia stores.
- Cost optimization measures have led to a 20 basis points improvement in Q1 margins.
- The company has seen a significant upswing in gold and studded jewelry sales post the reduction in customs duty.
- The Watches and Wearables segment, particularly Fastrack, has shown strong volume growth of 16% due to product innovation and premium offerings.
Negative Points
- The rising gold prices and fewer wedding dates have posed consumption challenges.
- Competitive intensity in the jewelry market has increased, impacting growth.
- The company faces potential margin pressures depending on future gold price movements.
- There is a significant difference in control and stand-alone profit, partly due to losses in the international business.
- The impact of the custom duty cut on gold on lease has led to a one-off charge affecting the P&L.
Q & A Highlights
Highlights of Titan Co Ltd (BOM:500114) Q1 FY25 Earnings Call
Q: What was the same-store growth (SSG) for the quarter and the new store growth?
A: Same-store growth was around 3% for the quarter, and overall growth was around 9%. We aim to target around 40 to 50 new Tanishq stores, 70 to 80 Mia stores, and a similar number for CaratLane.
Q: How does the company view the impact of the recent custom duty reduction on gold?
A: The reduction in custom duty by 9% is expected to reduce the attractiveness of illegal imports and provide some relief on gross margins, especially for studded jewelry. However, the overall impact will depend on how gold prices behave in the future.
Q: Can you elaborate on the competitive intensity in the jewelry market and its impact on Titan?
A: Competitive intensity has increased, but we believe we have held on to our overall market share. Different regions have behaved differently, with some regions showing gains and others being flat. We are mindful of the competition and track around 40 to 50 players city by city.
Q: What are the drivers behind the margin improvement in Q1 despite lower sales growth?
A: The margin improvement was primarily due to overhead management in line with subdued growth. There was no significant change in gross margins or premiums. Cost optimization levers are expected to continue in the coming quarters.
Q: How is the company addressing the rising competition from organized players in the jewelry market?
A: We are focusing on expanding our presence in smaller towns and cities where there are no organized players. We also track the growth of organized players and adjust our strategies accordingly. The competitive landscape is evolving, and we are continuously improving our capabilities.
Q: What is the contribution of international stores to the jewelry business?
A: International stores contribute around 3% to the jewelry business but are growing rapidly. We have seen a significant upswing in gold and studded jewelry sales post the budget announcement and custom duty reduction.
Q: How is Titan ensuring the authenticity of natural diamonds amid the rise of lab-grown diamonds?
A: We have invested extensively in equipment and stringent testing processes to ensure that every stone is tested multiple times before it reaches the customer. This ensures that there is no contamination with lab-grown diamonds.
Q: What is the company's strategy for the growth of non-Tanishq brands like Mia and CaratLane?
A: Both Mia and CaratLane have significant growth opportunities. The market size for younger, modern audiences is large, and we aim to address this market with multiple brands. New buyer contribution for Tanishq, Mia, and Zoya is around 45%.
Q: How does the company view the impact of the custom duty reduction on future demand and pricing strategies?
A: The custom duty reduction has positively impacted customer sentiment, leading to increased demand. However, it is too early to predict long-term effects. We do not plan to increase making charges as we already operate at a premium.
Q: What are the key factors driving the growth in the watches and wearables segment?
A: The growth is driven by differentiated and premium products, such as ceramic and automatic watches. Our product lineup is now more oriented towards today's young customers, which has given us a significant boost.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
