Titan cuts FY25 jewellery EBIT margin guidance to 11-11.5%, expects improvement in H2

Titan reported 25 percent fall in net profit at Rs 705 crore for the quarter ended September 30, 2024.

Jeweller and watchmaker Titan Company's management reduced its jewellery EBIT margin guidance to 11-11.5 percent for FY2024-25, cutting it from the 11.5-12.5 percent band shared earlier.

"Given what we have done in H1, I think FY25 looks like more between 11 and 11.5 percent. Maybe we can go back to our original guidance for the next year," said Ashok Sonthalia, Titan's Chief Financial Officer in the Q2 earnings call.

The first quarter was poised to be the weakest as a result of factors, while the inauspicious Shradh period fell in Q2. As a result, the margins trajectory would be slightly better in H2. "And that is, that what gives us confidence in H2, we will be slightly better off than H1," added the management.

For the quarter ended September, excluding the impact of the customs duty cut, the overall EBIT margin came in at 11.4 percent, a sharp fall from of 270 basis points from 14.1 percent in the same quarter of the previous fiscal year.

To this, the management clarified that most of the 270 basis point margin drop is due to the studded product mix, which includes both studded products and gold coins. The rising gold prices also increased the material cost of studded pieces, adding to the impact.

Also Read | Titan Q2 net profit declines 25% to Rs 705 crore

Earlier in the day, Titan reported 25 percent fall in net profit at Rs 705 crore for the quarter ended September 30, 2024. The company reported net profit of Rs 940 crore in the year-ago period. However, the firm noted that the reduction in customs duty, during the budget, had an impact of Rs 290 crore on the firm's bottom-line.

The company's total income rose 24 percent to Rs 12,458 crore in Q2FY25 as compared to Rs 10,027 crore in Q2FY24.

"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.

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