Jeweller and watchmaker Titan Ltd on November 5 reported 25% fall in net profit at Rs 705 crore for the quarter ended September 30, 2024 as a cut in customs duty on gold imports led to inventory losses and shrank margins. The company reported net profit of Rs 940 crore in the year-ago period.
The company's total income rose 24% to Rs 12,458 crore in Q2FY25 as compared to Rs 10,027 crore in Q2FY24.
Consumer demand rose significantly after customs duty on gold imports was cut to 6% from 15% in July, aiding growth in plain gold sales for the quarter, Titan had said in its quarterly update earlier.
On November 5, Titan's shares on BSE closed 0.4% higher at Rs 3,235 apiece.
Jewellery segment's total income for the quarter grew 26% to Rs 10,763 crore YoY. "The India business grew 25% in the same period. EBIT, at Rs 932 crore, came at a margin of 8.7% for the quarter. Normalising the custom duty impact, Q2FY25 EBIT came at Rs 1,222 crore, clocking 11.4% margin," said Titan about its jewellery segment's performance.
"The custom duty reduction saw revival in consumer interest as gold prices cooled off temporarily. The ensuing gold rush lasted well into mid-September. Buyer growth was healthy and well accompanied by increase in average selling prices, both exhibiting double-digit growths. During the quarter, in India, Tanishq opened 11 new stores (net)," said Titan in a stock exchange filing.
The company's Earnings before Interest & Tax (EBIT) fell 17.5% to Rs 1,128 crore in Q2FY25 as compared to Rs 1,367 crore in Q2FY24.
CK Venkataraman, Managing Director, said: "After a muted Ql, Q2 witnessed encouraging growth across key businesses. Jewellery clocked healthy double digit growth for the quarter. Our portfolio approach in this business of straddling diverse customer needs through the brands of Tanishq, Mia, Zoya and CaratLane is working well. The buyer growth metrics were fairly strong and in good double-digits across gold and studded product categories. The quarter also witnessed analog watches growing 25%+ over last year with commensurate uptick in volumes. Titan brand continues to be Indian consumers proud choice in this segment. On account of the customs duty related losses, as well as the need to invest in growth of various businesses, the profitability of Q2 was quite depressed. However, we are quite confident about the competitiveness of each of our businesses and we remain optimistic about our performance for rest of the financial year."
Titan already had inventory it had purchased before the cut in import taxes, reducing the average value of its stock during the quarter. Moreover, it had to sell the old inventory at the new, lower market prices after the cut.
The company saw an impact to the tune of Rs 290 crore as a result of the customs duty cut, Venkataraman said.
Its smaller watches and wearables segment, which houses Fastrack and Xylys watches, recorded a 19% revenue growth in the second quarter, helped by strong demand for analog watches.
Titan's overall sales rose nearly 26% to Rs 13,473 crore during the quarter.
With inputs from Reuters
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