Titan Company, the largest organised jewellery retailer in India, reported 21% rise in net profit to Rs 356.79 crore for the quarter ended March 31. This has been the best profit growth in five quarters.
Total income declined 5.46% to Rs 4,468.84 crore compared to the previous year. However, it was ahead of analysts consensus estimates.
The standalone profit before tax stood at Rs 516 crore during the quarter under review, against Rs 465 crore last year. Higher-than-expected revenue along with lower corporate taxes aided the growth in the company’s net profit.
Low raw material costs led to a 280 basis points expansion in the company’s gross margins. While the jewellery segment revenue declined 5.8%, revenue in the watches segment grew 5%.
The company’s good performance across all divisions in the first two months of the quarter was negated considerably by Covid-19 pandemic in the second half of March.
For the whole fiscal year (FY20), net profit stood at Rs 1,492.66 crore compared to Rs 1,388.65 crore posted in FY19. Revenue at Rs 21,204.77 crore saw a growth of 6.2%.
FY20 was challenging for Titan’s jewellery division (Tanishq) due to a significant surge in gold prices & slowdown in discretionary spending. Despite dual headwinds, Tanishq continued to outperform the industry with sustained market share gains.
Titans, robust balance sheet and asset light distribution model have enabled it to outpace peers in terms of store addition. Therefore despite short term headwinds we believe Titan can recover faster once normaly post covid 19 happens which hopfully looks possible from FY22 onwards.
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