Titan Company Limited — Q4 FY25 earnings call

Call held 8 May 2025

Management summary

Titan Company reported a satisfying Q4 FY25 performance across segments, driven by innovation and execution excellence, despite challenging gold prices and discretionary consumption pressures. The jewellery business saw strong retail sales growth of 20% and maintained EBIT margins around 11.6%. Management expressed a bullish outlook for jewellery, targeting double-digit growth and significant store expansion, while remaining cautious on Lab-Grown Diamonds due to market instability.

Highlights

  • Domestic jewellery business EBIT margin was approximately 11.6% in Q4 FY25.

  • Jewellery retail sales growth (secondary) was around 20% in Q4 FY25.

  • Jewellery primary sales growth (NSV) was approximately 23% in Q4 FY25.

  • Studded sales secondary growth was around 10-12% in Q4 FY25.

  • Gold on Lease (GOL) rates almost doubled, increasing financing costs by 30-40%.

  • Management targets high double-digit growth for jewellery, aiming for 15-20% in the future.

  • Plans to open 40-50 new Tanishq stores and transform 50-60 existing stores in FY26/next 18 months.

Concerns

  • Gold price volatility and its impact on consumer sentiment and working capital.

Key financials

  1. Standalone Jewellery Growth 21%
  2. EBIT Growth 12%

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 Domestic Business
    11.6% EBITDA Margin20% Retail Sales Growth (Q4)23% Primary Sales Growth (Q4)11% Studded Sales Secondary Growth (Q4)

Guidance & targets

Profitability

  • Jewellery EBIT Margin Profitability · future · Medium confidence 11-11.5%
    As far as coming to 11% to 11.5% margin guidance, I think that stays. We are not guiding you for any upside.

    — Ashok Sonthalia

Revenue

  • Jewellery Sales Growth Revenue · future · Medium confidence high double-digit
    But certainly, we are targeting and we are preparing and aiming for these high double-digit growths.

    — Ajoy Chawla

  • Jewellery Sales Growth Revenue · future · Medium confidence 15-20%
    I would still say it is healthy double-digit growth whether it is going to be 15% or 20% or something in between the two, we would still leave it at that, between 15% to 20% is a fairly good rate I would say.

    — Ajoy Chawla

  • Jewellery Sales Growth Revenue · next few years · High confidence healthy double digit
    our outlook for jewellery not just for the year but for the next few years continues to be bullish and we are committed to driving healthy double digit growth year-on-year.

    — Ajoy Chawla

Distribution

  • New Tanishq Stores Distribution · FY26 · High confidence 40-50
    40 to 50 stores.

    — Ajoy Chawla

  • Existing Store Transformation Distribution · next 18 months · High confidence 50-60
    we are also looking at 50 to 60 stores of existing stores being either renovated or relocated or adding additional space.

    — Ajoy Chawla

Risks & concerns

  • Gold price volatility and its impact on consumer sentiment and working capital.

    high

    High gold prices impact lower price band demand, increase financing costs (GOL up, 30-40% higher interest), and put strain on working capital.

    Both acknowledged

  • Competitive intensity in the jewellery market, especially on making charges.

    medium

    High competitive intensity, particularly on making charges, continues to be a factor.

    Management acknowledged

  • Uncertainty and price volatility in the Lab-Grown Diamond (LGD) market.

    medium

    Wholesale LGD prices continue to drop, creating a 'choppy situation' and customer confusion, leading Titan to maintain a wait-and-watch approach.

    Both acknowledged

  • International tariffs (US market) impacting costs and demand.

    low

    Tariffs in the US market are not currently a significant cost, and management believes they are unlikely to mute demand, with potential for price increases if tariffs go up.

    Management downplayed

Areas of evasion (2)

  • Specific quantum of hedging gain
  • Definite timeline/plan for LGD entry

Q&A highlights

2 direct
Impact of gold price increase on consumer behavior and shift to lower caratage/making charge. Direct
consumers are looking for solutions both on terms of lightweight jewellery, lower caratage jewellery as well as probably lower making charge jewellery. So, you know, they still want gold but they're looking at how they can manage it within their budgets.

Reveals consumer adaptation strategies to high gold prices, impacting product mix and potential for lower margin products.

Asked by Manoj Menon

Sustainability of jewellery margins given weakening mix and hedging gains. Direct
11.6% nevertheless had element of, small element of operating leverage as well as some hedging gains sitting it... As far as coming to 11% to 11.5% margin guidance, I think that stays. We are not guiding you for any upside.

Clarifies the components of current margins and reiterates margin guidance, indicating no immediate upside despite Q4 performance.

Asked by Avi Macquarie

Views on entering the Lab-Grown Diamond (LGD) space, given price drops and market dynamics. Partial
We will keep thinking about it, is the best I can say because the stability has not been reached and it's not that everybody is coming and asking for LGDs etc. and many players are jumping in anyway so I think it's too premature to comment.

Highlights management's cautious and undecided stance on a potentially disruptive market segment, indicating a wait-and-watch approach due to market instability and customer confusion.

Asked by Kunal Vora

2 min read 6 chapters

Detailed narrative

Consumer Response to High Gold Prices

Management noted a reticent consumer sentiment in the sub-₹50,000 price band due to sharp gold price increases. Consumers are seeking solutions like lightweight jewellery, lower caratage (18 carat, 9 carat), and lower making charge products to manage within budgets. Despite this, management would welcome a gold price correction as it would bring more customers into the market.

Jewellery Business Performance & Outlook

The domestic jewellery business reported an EBIT margin of approximately 11.6% in Q4 FY25, supported by operating leverage and some hedging gains. Retail sales growth for jewellery was around 20%, while primary sales growth was 23%. Management reiterated its margin guidance of 11-11.5% and aims for 'high double-digit' growth, specifically mentioning a '15% to 20%' range for jewellery sales in the future, driven by positive tailwinds like a good wedding season and government spending.

Studded Jewellery Dynamics

Studded jewellery saw secondary sales growth of 10-12% in Q4 FY25. Management clarified that while Solitaire buyers (especially for investment) are holding back due to price volatility, demand for smaller stone sizes and non-Solitaire studded jewellery (over 90% of the business) is robust. They are pivoting towards smaller carat sizes and leveraging portfolio play across brands like Tanishq, CaratLane, and Mia to drive growth in the sub-₹1 lakh range.

Lab-Grown Diamonds (LGD) Stance

Wholesale prices of LGDs continue to drop, making them more affordable, but the market remains 'choppy' with new players entering. Management expressed caution about entering the LGD space, citing market instability, customer confusion, and the need to understand customer preferences and ensure a sustainable value proposition before committing.

Store Expansion and Transformation

For FY26, Titan plans to open 40-50 new Tanishq stores, primarily franchised L2 or L3 formats. Additionally, a significant transformation program is underway, with plans to renovate, relocate, or add space to 50-60 existing stores over the next 18 months, covering a mix of franchise and company-owned outlets.

Working Capital and Gold on Lease (GOL) Costs

The company experienced a 'little bit of strain' on working capital due to increasing gold prices and some year-end up-stocking for an early Akshaya Tritiya. Gold on Lease (GOL) rates 'almost doubled and more than doubled,' leading to a 30-40% increase in financing costs for the same quantity of GOL. Management plans to leverage GOL more to manage working capital but acknowledges the unpredictability of gold price trajectory.

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