Shares of Titan Company declined over 5% on Tuesday after the “Tanishq” jewellery maker reported a consolidated net loss of Rs 297 crore for the June quarter, impacted by lower income due to the COVID-19 pandemic.
It had reported a net profit of Rs 364 crore in the corresponding period of the preceding fiscal.
Titan posted a pre-tax loss of Rs 335 crore. It had reported a profit before tax (PBT) of Rs 523 crore in the corresponding quarter of the previous financial year.
Total income during the quarter under review declined 61.21% to Rs 2,020 crore as compared to Rs 5,208 crore earlier.
Almost all of its segment from watches and jewellery to eyewear reported loss in the past quarter leading to an overall revenue declined almost 74% on year to Rs 1,251 crore.
Along with the lost sales due to postponed weddings and less discretionary spending— high gold prices has added to the jewellery makers’ woes. Recently, gold futures have been trading at an all-time high of Rs 57,500.
Sales of the jewellery maker is expected to remain muted until the third quarter. The liquidity crunch due to coronavirus will impact gold demand post lockdown, and many people will sell their existing jewellery— which may widen the gap between buying and selling price.
The severity of the disruption in business due to the pandemic impacted its performance resulting in an unprecedented loss.
However, given the recovery in business, particularly in the jewellery business, which is encouraging, it expect to get back to normalcy by the fourth quarter of this year.
The Q1 earnings were weaker than estimates, while macro & business headwinds will likely outweigh market share gains.
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