Titan bets on studded jewellery, premium watches and eyewear to drive growth
Titan’s strong Q2 performance, driven by studded jewellery and premiumisation, is expected to sustain earnings growth, with gold price stability and a prolonged wedding season likely to revive buyer growth.
Titan Company's September quarter results revealed robust revenue and profit growth, bolstered by the popularity of studded jewellery, despite stagnant buyer numbers. The watch, jewellery and eyewear conglomerate anticipates increased buyer growth as gold prices stabilize, boosted by a prolonged wedding season. Titan has introduced lighter, more affordable jewellery designs to appeal to cost-conscious customers.
Studded jewellery now accounts for 35% of the company's sales, and the business continues to expand its upscale brands Tanishq and CaratLane. The premiumisation of watches, improved profitability in eyewear, and rapid expansion of Titan Engineering & Automation (TEAL) are anticipated to propel future earnings. Shares of Titan surged 3.6% over three trading sessions following the announcement of the quarterly results on Thursday.
Consumer gold purchases faced challenges during the quarter due to fluctuating and high gold prices; however, stable gold prices are crucial for attracting customers back to stores. Titan offers more affordable jewelry options, such as 18K, 14K, and lightweight collections, to broaden its customer base and boost sales. Studded jewellery has been a significant growth driver for Titan, with a 32% year-on-year increase during the quarter, compared to 16% growth from the previous year.
The segment's potential for further expansion is substantial. Titan's watches division experienced robust demand for premium analogue watches in the Rs 25,000-Rs 1 lakh price range, contributing to stronger revenue and margin expansion. The management believes that festive demand trends remain healthy post-Q2. Titan's precision engineering business, TEAL, has benefited from opportunities in aerospace, electronics, semiconductors, and new-energy applications, resulting in strong revenue growth and margin expansion.
The segment's increasing scale is expected to diversify Titan's earnings profile beyond its jewelry business. Financial analysts remain optimistic about the growth prospects of the jewellery industry and Titan's potential to gain market share through initiatives like its exchange program.
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