Titan Company Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Titan Company delivered a strong Q3 FY25, marked by robust performance in its Jewellery and Watches & Wearables divisions. Jewellery saw a significant improvement in same-store growth to 22%, while watches experienced strong double-digit growth across segments. Emerging businesses like Taneira and CaratLane also showed healthy retail and buyer growth. Management expressed confidence in its long-term strategy, leveraging its strong brand, customer base, and market formalization trends, despite acknowledging short-term gold price volatility.

Highlights

  • Jewellery SSG improved significantly from 15% in Q2 to 22% in Q3.

  • Taneira reported 30% retail growth and 38% buyer growth, despite flat sales growth due to fewer new store openings.

  • CaratLane achieved 16% like-to-like store growth in Q3, following 21% in the previous quarter.

  • Jewellery EBIT margins are expected to be anchored around 11% to 11.5% on an annualized basis.

  • The company's total customer database exceeds 4 crores, aiding customer retention and acquisition.

  • New buyers constituted 48% and repeat buyers 52% for the jewellery division in Q3.

Concerns

  • Gold Price Volatility

What they filed

Q1 FY27: revenue up 24.3%, net profit up 65.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue13,215 16,097 13,477 14,564 16,534 +25%22,522 +40%23,934 +78%18,101 +24%
EBITDA1,133 1,510 1,438 1,632 1,620 +43%2,336 +55%1,715 +19%2,564 +57%
Net profit705 990 870 1,030 1,006 +43%1,470 +48%1,124 +29%1,699 +65%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Jewellery Division
    22% SSG Growth11% EBIT Margin (Annualized)11.5% EBIT Margin (Annualized)
  • Watches & Wearables Division
    50% Premium Brands Growth33% Fastrack Growth24% Sonata Growth
  • Taneira (Emerging Business)
    30% Retail Growth38% Buyer Growth0% Sales Growth
  • CaratLane (Emerging Business)
    16% Like-to-like Store Growth (Q3)21% Like-to-like Store Growth (Previous Q)

Guidance & targets

Profitability

  • Jewellery EBIT Margin Profitability · Annualized basis · High confidence 11% to 11.5%
    And for an annualized basis between 11% to 11.5% is what I think we are likely to realistically achieve.

    — Ajoy Chawla, CEO, JEWELLERY DIVISION

  • Jewellery EBIT Margin Threshold Profitability · Annualized basis · High confidence Not going below 11%
    But by and large, not going below 11% on an annualized basis is for sure my threshold.

    — Ajoy Chawla, CEO, JEWELLERY DIVISION

Strategy

  • Wearables Strategy Results Strategy · 6 to 18 months · Medium confidence —
    We should be able to implement and see the results in the next, I'd say, 6 to 18 months.

    — Suparna Mitra, CEO, WATCHES & WEARABLES DIVISION

Distribution

  • Taneira Store Expansion Focus Distribution · Ongoing · High confidence —
    Now we are focusing more on metros and Tier-1 cities, and not going to smaller towns. So, there has been a small change in our strategy, and we would like to populate more stores in the existing and operational cities.

    — Ambuj Narayan, CEO, INDIAN DRESSWEAR DIVISION

Growth

  • FY26 Growth Confidence Growth · FY26 · High confidence —
    And I'm sure our confidence in the FY '26 growth got another additional boost four days back.

    — C.K. Venkataraman, MANAGING DIRECTOR, TITAN COMPANY LIMITED

Risks & concerns

  • Gold Price Volatility

    high

    Unprecedented and spiralling gold prices, with a 25% jump over the last year, make short-term predictions for Q4 challenging and impact GC percentages.

    Management acknowledged

  • Competitive Intensity

    medium

    High levels of competitive intensity continue in the market, requiring constant agility and focus on customer value.

    Management acknowledged

  • Wearables Category Correction

    medium

    The wearables category is undergoing a 'very big correction', prompting Titan to re-look at its strategy and focus on its strengths.

    Management acknowledged

  • Increase in Gold Lease Rates

    medium

    Initial indications suggest gold on lease rates could go up, which the company is monitoring and managing through various levers.

    Management acknowledged

Areas of evasion (3)

  • Gold sourcing loophole by government
  • Specific competitive actions on making charges
  • Precise timeline for studded jewellery margin normalization

Q&A highlights

1 direct
Studded Jewellery Margin Normalization Partial
Overall, if you see over the last 1 year, it's a 25% jump in gold price. And diamond prices have remained where they are... we think it would be appropriate to chase growth over margins. And in a way, that has been our enduring strategy.

Management explained that gold price volatility and a strategic focus on growth over margin percentages make it difficult to predict margin normalization for studded jewellery.

Asked by Avi from Macquarie

Emerging Business (Taneira) Slow Growth Direct
Taneira's sales growth was flattish. But if you look at our retail growth, we grew by 30% and our buyer growth was 38%. The reason why it looks flattish is because last year we had opened seven L3 stores in quarter 3, and whereas this year we opened only one L3.

Management clarified that Taneira's flat sales growth was due to fewer new store openings compared to the previous year, while underlying retail and buyer growth remained strong.

Asked by Abneesh Roy from Nuvama Wealth

Competitive Landscape and Gold Price War Partial
Competitive activity, yes, of course, I mean all of us know and you would also obviously have it in the back of your mind is a daily affair... I think it is an ever-increasing spree, and therefore our efforts are also in that direction to see what we can do between product mix, between better sourcing, between working on minimising gold loss, GC max, a lot of execution, which kind of helps us stay afloat.

Management acknowledged ongoing competitive intensity and dynamic pricing but emphasized their focus on internal execution, customer value, and brand strength rather than specific competitive responses.

Asked by Sheela Rathi from Morgan Stanley

3 min read 6 chapters

Detailed narrative

Q3 FY25 Performance Overview

Titan Company reported a strong Q3 FY25, with robust growth across its key divisions. The Jewellery division saw its Same-Store Growth (SSG) improve significantly from 15% in Q2 to 22% in Q3. The Watches & Wearables division also performed well, with premium brands like Edge, Nebula, and Xylys growing over 50%, while Fastrack and Sonata recorded 33% and 24% growth respectively. This performance is attributed to the company's focus on upper-middle and affluent customer segments, which are benefiting from increased wealth and income growth in India.

Jewellery Division Dynamics and Margins

The Jewellery division's strong performance was driven by wedding-related purchases, occasion purchases, and high-value studded sales. Studded buyer growth was noted as healthier than gold, with new buyers accounting for 48% and repeat buyers 52% in Q3. Despite the impact of spiraling gold prices on Gross Contribution (GC) percentages, management aims to maintain annualized EBIT margins between 11% and 11.5%, with a stated threshold of not falling below 11%. Initiatives to manage material costs and overheads are underway to support these margin targets.

Watches & Wearables and Emerging Businesses Momentum

The Watches & Wearables division demonstrated strong growth across both its premium and affordable segments, with new product launches and restaging contributing to success. In emerging businesses, Taneira reported flat sales growth in Q3, primarily due to opening only one L3 store compared to seven in the prior year, but achieved strong retail growth of 30% and buyer growth of 38%. CaratLane continued its positive trajectory with a 16% like-to-like store growth in Q3, building on 21% from the previous quarter, indicating sustained momentum.

Competitive Landscape and Gold Price Volatility

Management acknowledged an 'ever-increasing spree' of competitive intensity in the market but reiterated its focus on customer value, brand superiority, and internal execution rather than engaging in direct price wars. Gold price volatility, including a 25% jump over the last year, was highlighted as a significant external factor making short-term predictions for Q4 challenging. The company is also monitoring initial indications of rising gold lease rates and is prepared to manage this through various levers, including spot buying and operations via GIFT City.

Customer Engagement and Market Strategy

Titan leverages its extensive customer database, which exceeds 4 crores, and a robust CRM system to maintain strong customer relationships and drive repeat purchases. The company's strategy involves a portfolio approach across Tanishq, CaratLane, and Mia to cater to diverse customer needs. For Taneira, the focus for store expansion has shifted to metros and Tier-1 cities, aiming to populate more stores in existing operational areas rather than smaller towns.

Long-Term Outlook and Growth Drivers

Management expressed strong confidence in the company's growth trajectory for FY26 and beyond, citing several structural advantages. These include favorable segment dynamics driven by premiumization, low market share in multiple categories offering significant headroom for growth, and the acceleration of market formalization. Titan's unique Exclusive Brand Format (EBF) model, strong brand equity, and extensive partner network across 1,000 locations are considered enduring competitive strengths, providing a 'long runway' for sustained growth.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Durables earnings calls