In Q4, we expect diamond studded sales to be more than 22 percent that we saw in the last quarter
Titan Industries ‘ volumes in the watch business rose a weak 4 percent in Oct-Dec and growth in the fourth quarter could be similar, CFO S Subramaniam, said on Thursday.
Last quarter, the Bangalore-based company’s diamond jewellery sales were also low as more people opt for gold during the festive period of Dassera and Diwali. Subramaniam expects the diamond jewellery sales to be “significantly” more than the 22 percent growth it saw in the third quarter, helped by the discount scheme it runs in Jan.
Titan on Wednesday reported a 24 percent year-on-year rise in third quarter net profit at Rs 204 crore. Its revenue for the three-month period was up 23 percent to Rs 2,983 crore.
Analysts on average were expecting Titan to report a net profit of Rs 205 crore on revenue of Rs Rs 2,910 crore, according to a CNBC-TV18 poll.
While the festive season did bring in more customers, Subramaniam noted that much of the growth was driven by new store openings and demand as such remained sluggish.
Investment bank Goldman Sachs said that it remains positive on Titan’s ability to create brands and expand its retail footprint.
However, it maintained a “neutral” rating on the stock, saying current valuation adequately reflected that potential.
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Below is S Subramaniam’s interview on CNBC-TV18
Q: The disappointment is in the share of diamond studded jewellery in the current quarter. Can you explain what happened and whether you see this as a trend going forward?
A: Diamond studded jewellery in this quarter is low because this is a season where people buyPlaingold. Diwali season, festival season along with wedding season, a lot of plain gold jewellery is purchased. It is also our largest selling quarter. Therefore, the ratio of plain gold jewellery to diamond studded jewellery will be high.
We did have a fair dip in this quarter for reasons which we are still not very clear about, but are hoping that things would get better. Let’s also not forget that in Q2, we run Diamond Activation.
We had significant sales and a 32 percent share last quarter and for Q4, we would have one more activation. Therefore, we expect diamond studded sales to be more than 22 percent that we saw in the last quarter. It is a seasonal impact. Overall, this year we should be 26-27 percent atleast, if not more for the year.
Q: Sales growth and retail volumes were a bit subdued in the current quarter. Are you facing any pressure or sluggishness in the consumer segments? Can you give us some trends on how January has been?
A: 10 percent growth, there is sluggish demand, while in the overall quarter we did 27 percent, a lot of that has come from new stores, so the demand is still muted. I don’t think the economy has recovered.
People are not walking into stores in droves. The festive season did bring in a lot more walk-ins and fortunately the good pattern, we have seen is that post Diwali there hasn’t been a major slump that we witnessed last year and that’s a good sign. January is also not so bad.
It is more cautious. People are cautious about investing in gold, but it is still sometime away from a large growth that we are going to see.