Titan

Titan Company posted a set of dismal set of numbers for Q3FY14. Its net profit fell 19% (YoY) at Rs.166 crore on a 11% drop in net sales at Rs.2605 crore. This Q3 was the lowest quarterly growth in sales during FY14 due to a poor festive season. Its EBITDA dropped 11% at Rs.220 crore though margins improved 30 bps to 8.3%.

The poor performance was mianly on the back of very sluggish demand in jewellery in Oct and Nov. Jewellery business recorded a decline of 15.4% in Q3 over last year primarily due to a lower demand for gold Jewellery. The first quarter had seen a surge in demand due to lower gold prices. The jewellery industry was also adversely impacted by the regulatory measures implemented to restrict gold imports. It had an income of Rs.2126.67 crore this year in Q3 as compared to Rs.2515.24 crore last year. The income from watches was Rs.455.48 crore in Q3, a growth of 7.5%. Other businesses of the Company comprising Precision Engineering, a B2B business, the Eyewear business and accessories grew by 18.6% in Q3. 

Sell forwards still go on discount as gold prices remain pretty volatile but the company has stated that it is hedged adequately. This is though expected to increase the company’s debt by Rs.1100 to 1200 crore  by end of Fy14 and this would mean higher interest outgo. Pressure on margins is expected to come in if demand also remains low.