Titan Company (NS:TITN) Ltd. reported a 23% year-on-year drop in net profit for Q2 FY25, totaling INR 704 crore, down from INR 916 crore in Q2 FY24. This underwhelming result missed market forecasts, which had anticipated profits closer to INR 990 crore. However, total income rose by 26% to INR 13,660 crore, driven by strong topline growth despite a profit squeeze.
The company’s EBITDA also dropped, declining 14.7% year-on-year to INR 1,188 crore, with the margin slipping to 8.7% from the previous year’s 12.8%. Profit before tax decreased by 24% to INR 948 crore, mainly due to the impact of a customs duty reduction.
Segmental Highlights:
Jewellery:
Titan’s core jewellery segment saw robust sales, with revenue increasing by 26% year-on-year to INR 10,763 crore. The Indian business grew by 25%, with EBIT at INR 932 crore, achieving an 8.7% margin. Adjusted for the impact of customs duty, EBIT for the segment was INR 1,222 crore, a margin of 11.4%. The duty cut, which temporarily cooled gold prices, stimulated a gold buying spree into mid-September. Tanishq, Titan’s flagship brand, expanded its footprint with 11 new stores, while Mia and Zoya added 12 and 1 store, respectively.
Watches & Wearables:
This segment recorded total income of INR 1,301 crore, a 19% rise over Q2 FY24, supported by a strong domestic market. EBIT was INR 194 crore, with a 14.9% margin. Demand for analog watches, especially the Titan brand, drove revenue up by 26%, while the Helios channel saw a 43% surge, reflecting a shift toward premium and international brands. However, the wearables sub-segment faced a 13% decline due to reduced average selling prices. Titan World, Helios, and Fastrack collectively added 34 new stores in Q2 FY25.
Eyecare:
Titan’s eyecare division posted revenue of INR 201 crore, up 7% year-on-year, with EBIT at INR 24 crore and an 11.9% margin. Frames and lenses experienced volume growth, although sunglasses saw a seasonal dip in demand. International eyewear brands registered a strong 53% growth, driven by increased promotional activities. Titan Eye+ expanded by adding three new stores during the quarter.
The stock is down 2.6% to INR 3,145 at the opening tick, however, before trying to capitalize on this dip, investors must not forget to check the valuation of Titan Company. Many times even a great dip might not translate into a good buying opportunity, hence, valuations should always be considered.
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