Titan Q2 Results Preview | Strong all-round performance to drive 64% YoY growth in revenues, PAT to increase by 175%

Experts expect a 64 percent growth in revenues year-on-year from Rs 4,318 crore and sequential growth of 117 percent from Rs 3,249 crore.

“Excluding bullion sales of Rs 391 crore in the base quarter, the jewellery segment grew 78 percent in Q2FY22 with a strong 2-year CAGR of 32 percent, aided by pent-up demand and a 10 percent store addition CAGR (414 jewellery stores vs. 345 in Q2FY20),” Emkay Research analysts says.

Demand recovery

In its quarterly update, the company said, pent-up demand after the second wave was seen in gift purchases, occasions, milestone buying, weddings and investments in gold.

While studded sales saw strong double-digit growth, the studded mix was lower than pre-Covid levels due to higher growth in plain gold sales.

Watches and eyewear segments also posted a strong recovery and returned to pre-Covid levels with a 2-year revenue CAGR of -2 percent and 3 percent, respectively.

Emkay said the faster recovery in this segment was aided by a 2 percent/6 percent store addition CAGR in watches/eyewear, improvement in mall walk-ins and consistent growth in the e-commerce channels.

Titan added eight stores for watches and 24 for eyewear during the September quarter.

Caratlane’s business remained strong, with 95 percent growth, driven by the launch of new merchandise and marketing initiatives.

Other businesses (Taneira, fragrances and accessories) grew 121 percent, aided by higher operational stores and healthy recovery in retail, department stores and e-commerce, the company said.

What to expect

Emkay expects faster share gain from unorganised players in the jewellery business since Titan’s entire network of stores is hallmarking-compliant.

It expects the company to report Q2 revenues of Rs 7,070 crore, with a YoY growth of 63.7 percent and a 117.6 percent growth on a QoQ basis.

Kotak Institutional Securities expects the volume growth to be marginally higher than value growth, as gold price is slightly down YoY basis.

It expects the standalone revenue to grow by 63.3 percent to Rs 7,053 crore YoY basis and 117.1 percent on a QOQ basis.

Motilal Oswal says stable gold prices are positive for jewellery demand and expects a YoY growth of 63.8 percent in revenues.

Based on strong growth across businesses, experts expect phenomenal growth in EBITDA and EBITDA margins.

Kotak expects a 195 percent YoY growth in EBITDA to Rs 867 crore from Rs 294 crore reported last year. It expects EBITDA margins to improve by 550 bps YoY to 12.3 percent.

“We expect EBIT margin of 11.7 percent for jewellery business, 13 percent EBIT margin for watches segment and 17 percent EBIT margin for eyewear segment. We model 37 percent jewellery EBIT growth on two-year CAGR basis for the quarter,” Kotak said.

Emkay expects an EBITDA of Rs 816 crore, a 177.7 percent YoY growth. The EBITDA margin is expected to grow by 470 bps on to 11.5 percent.

Motilal Oswal, on the other hand, expects an EBITDA of Rs 800 crore with a YoY growth of 155 percent and an EBITDA margin of 10.7 percent.

On the PAT front, experts expect it to come in the range of Rs 550 crore.

Kotak expects a PAT of Rs 579 crore, a growth of 191 percent YoY basis and a net margin of 8.2 percent, which is 360 bps better than last year.

Emkay expects PAT to be around Rs 552 crore, with a YoY growth of 178 percent. It expects a net margin of 7.8 percent with a 320 bps increase over the last year.

Motilal Oswal’s expectations for PAT are at Rs 530 crore and the net margins at 7.1 percent.

The stock closed at Rs 2,442 on October 26, up Rs 62, or 2.8 percent, from its previous day’s close. The stock has appreciated more than 100 percent over the year, 57 percent in 2021, 42 percent in the last three months and 17 percent in the last month.