Titan Sinks 8% As Q4 Earnings Suffer From High Discounts And Gold Prices

The stocks of Titan suffered a heavy loss of around 8 per cent in the Monday trading session after the firm after the Indian jeweller missed the fourth quarter (Q4) FY23-24 estimates.

Titan stocks traded at Rs 3,260 with 7.73 per cent decline in the afternoon session on the National Stock Exchange (NSE).

Titan reported the Q4 earnings with profit below estimates hurt by offering heavy discount on its products to allure customers amid surging gold prices.

During the earnings call, Titan said that a soft demand environment due to "volatile and elevated gold prices" necessitated promotions to drive customer acquisition.

The company's overall revenue, which includes its smaller watch and eyewear businesses, jumped by 17 per cent. However, expenses increased by 18 per cent, partly as a result of rising gold prices.

Additionally, gold prices increased by 8.2 per cent throughout the reporting quarter.

Its earnings before interest and tax margin decreased to 11.1 per cent from 12 per cent as a result of gold prices and larger discounts.

Titan missed analysts' expectations of Rs 7.99 billion, reporting a profit of Rs 7.86 billion (USD 94.2 million) for the quarter ended 31 March, despite an increase of 7.1 per cent from the previous year, according to statistics from LSEG.

Jefferies noted that competitive intensity is to likely remain elevated, which may result in some margin pressures. Q1 is the election period and fewer wedding dates which could also weigh on growth.

Whereas Centrum expected Titan's strategy around serving millennials, meeting their aspirational demand with introduction of new designs and channels, yet rising share of wedding jewellery could pay richly.

The stock performance of Titan year-to-date (YTD) stood with loss of more than 11 per cent against the benchmark index, Nifty 50 gain of around 3.5 per cent YTD.