The jewellery segment of Titan demonstrated strong revenue growth driven by the benefit from the shift in ‘Shraad’ from Q2 to Q3. This performance should also be considered in the context of approximately 16% y-o-y inflation in gold prices and a 10% y-o-y retail expansion. It’s worth noting that the growth in new buyers at the value price point (<Rs 50K) for Tanishq has slowed down due to increased competitive intensity. Tanishq’s store expansion in the GCC (Gulf Cooperation Council) is progressing well, with the addition of 2 stores in Doha.
Importantly, the impact of the correction in diamond prices in the international market has mainly affected the solitaire segment, while the majority of Titan’s business operates in the non-solitaire segment. Revenue performance in the watch and eye-care segments remained stable, although operating profit margins contracted due to a one-off gain in the base quarter. We maintain an ADD rating. Net sales surged by 20% y-o-y to Rs 99 billion.
Titan’s domestic jewellery revenue surged by 21% y-o-y, while secondary sales increased by 27% y-o-y, driven by robust demand in studded, high-value, and wedding segments. In terms of store expansion, Tanishq added 10 stores (including 9 in GCC and 1 in New Jersey), bringing its total to 445. The revenue from watches grew by 32% y-o-y. Titan and international brands, like Helios, contributed significantly, making up two-thirds of the analog portfolio, resulting in a double-digit increase in average selling price.
We have reduced our FY25E earnings estimates for Titan by 4%. We are now modeling a revenue, Ebitda, and PAT CAGR of 16%, 17%, and 21% respectively over the period from FY23 to FY25E. Key downside risks to our outlook include an irrational competitive environment and a sustained or worsening macroeconomic situation that could lead to a slowdown in demand.