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Titan up 7% on strong Q2, jewellery margin at all time high

Titan Industries hit a 52-week high of Rs 272.80 on Thursday as the street gave a big thumbs up to its strong 22 percent net profit growth in the second quarter led by jewellery margins expanding to an all time high.

November 01, 2012 / 12:07 PM IST
 
 
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Moneycontrol Bureau


Titan Industries hit a 52-week high of Rs 278.40 on Thursday as the street gave a big thumbs up to its strong 22 percent net profit growth in the second quarter led by jewellery margins expanding to an all time high.


"(Jewellery) volume decline of 11 percent is due to sharp 30 percent decline in gold coins, which is a low margin business. Plain gold jewellery volumes declined 1-2 percent. This, coupled with increase in studded jewellery salience to 32 percent and increase in studded margins (better trade terms with franchisee), aided sharp mix improvement and consequently margin expansion of 280 bps year-on-year to 12.5 percent, all time high jewellery margins," brokerage Motilal Oswal said.


It upgraded the stock to "buy" from "neutral" and said the worst was likely behind for jewellery volumes. Sequential improvement in consumer sentiment, better festive season demand, higher number of wedding days, improving base comparison and aggressive retail expansion plans should augment the volume recovery, it added.


While jewellery margins expanded, margin in watches declined due to the rupee depreciation, higher input costs and investments in advertising and sales promotion and retail store expansion.


Titan has increased watches prices by 4-5 percent over April-Sep and Motilal Oswal expects there will be a delayed margin recovery, although improving volume trends augur well for margins.

At 10:00 hrs, Titan shares were up 4.5 percent at Rs 270.95 on NSE. 

first published: Nov 1, 2012 10:00 am

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