Titan Industries Q1 net up 17% to Rs 182cr, margin falls

Moneycontrol Bureau

Titan Industries' first quarter net profit rose 17 percent year-on-year to Rs 182 crore. Its net sales surged 42 percent from a year ago to Rs 3,088 crore in April-June, helped by strong sales of gold jewellery and coins, the watches to jewellery maker said on Thursday. Analysts on average had expected the company to report a net profit of Rs 189 crore on revenue of Rs 2,770 crore in the quarter. Titan's other income in the quarter surged 52 percent to Rs 38 crore. However, tax expenses rose 23 percent to Rs 70 crore and finance costs were up 35 percent to Rs 17 crore. The Bangalore-based company's EBITDA (earnings before interest, taxes, depreciation and amortization) came in at Rs 245 crore, below analysts expectation of Rs 271 crore. Its operating profit margin at 7.9 percent, down 170 bps, also fell short of street estimates of 9.8 percent. "The first quarter has seen encouraging topline growth, largely driven by jewellery on account of drop in gold prices. This resulted in high sales of plain gold jewellery and coins that deliver lower margins. Margins in both watch and jewellery businesses were (also) impacted due to change in product mix," Bhaskar Bhat, MD, said. Titan's jewellery sales last quarter rose 47 percent to Rs 2,614 crore, fuelled by a sharp drop in price of gold in April and a good wedding season in Q1. However, watches business revenue rose just 11 percent to Rs 402 crore. Consumer sentiment continues to be weak and discretionary spend was subdued, which impacted growth of watches business, Bhat added. Bhat is particularly concerned with the pressure of high inflation due to a weak Rupee, as well as rising import costs. The Reserve Bank of India announced several measures over the last couple of months to curb gold demand in the country to reign in high current account deficit. Last month, RBI announced new gold import measures mandating that banks and other nominated agencies should retain one fifth of every lot of gold they import in customs bonded warehouses and further gold import will be allowed only if they release 75 percent of that stored gold for exports. Earlier, it had banned banks from importing on consignment basis for domestic consumption. It had mandated that gold could only be imported on a 100 percent cash basis and not against letter of credit. "For the coming quarter we are working on our plans to deal with the weak consumer sentiment as well as the impact of recent regulatory measures introduced in the financing of gold imports," Titan's Bhat said. Titan shares closed down 1.5 percent at Rs 259.40 on NSE on Thursday. Tata Global Beverages Q1 net up 44% at Rs 112cr