Titan share price gains ahead of Q2 results today; profit could fall 27% YoY on one-time exceptional charge

Titan share price gained over a percent in early trade on Tuesday, November 5, as the company will announce its Q2 results today. The Tata Group company, which manufactures jewellery and watches, will declare its earnings for the second quarter ended September 2024 later today.

In its Q2 business update, Titan Company said it achieved approximately 25% year-on-year (YoY) growth in the second quarter of FY25. Jewellery domestic operations saw approximately 25% YoY growth in Q2, following a relatively modest performance in Q1.

Furthermore, Titan added a net total of 75 stores during the period, expanding its retail network to 3,171 stores.

According to estimates by Kotak Institutional Equities, Titan Company is expected to report around a 27% YoY drop in its Q2FY25 net profit due to a one-time exceptional charge.

The company is estimated to record a one-time inventory loss of ₹3,250 crore assuming about 70% of overall impact pertaining to custom duty cut in Q2, and it would likely be classified as an exceptional item.

The company’s revenue during the July-September quarter is expected to rise 2.2% YoY to ₹11,920 crore, with 21% growth seen in standalone jewellery sales, excluding the sale of gold bullion, as near-term demand was boosted by the custom duty cut.

“We do not rule out some pent-up demand given the softness in Q1, following the steep rise in gold prices. We expect about 300 bps drop in the salience of studded jewellery to 30%, partly due to pent-up demand in gold and partly due to underlying weakness in studded jewellery sales (about 15-30% drop in natural diamond prices + some impact of LGDs on consumer sentiment),” Kotak Equities said.

The brokerage firm estimates a 15% growth in Titan’s watches division and a 10% growth in the eyewear segment.

It is estimated that the like-for-like (LFL) recurring standalone jewellery EBIT margin will decline by 80 basis points year-over-year (YoY) to 13.3%, due to a decrease in the studded share (down 300 basis points YoY to 30%), a marginal cut in diamond prices, and the impact of ongoing rationalisation of the gold rate markup. Higher investments in the gold exchange program and other promotional offers would be largely offset by the intermittent easing of competitive pressure following the import duty cut.

Titan’s FY2025 consolidated jewellery EBIT margin guidance band is 11.5% - 12.5%. Kotak Equities estimates an 11% EBIT margin for watches and eyewear segments in Q2FY25.

Titan Share Price

Titan share price has fallen 12% in one month and more than 8% in six months. The Tata Group stock is down over 11% year-to-date (YTD) as against a 9% rise in Sensex.

At 10:25 am, Titan shares were trading 0.44% higher at ₹3,239.95 apiece on the BSE.

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