Titan’s jewellery sales back on track in September

Despite a muted sentiment, it has gained market share

Despite the muted market sentiment, the Titan Company stock gained over 5 per cent in two trading sessions on expectations of a pick-up in the jewellery segment sales in the September quarter. The company had reported 6 per cent sales growth for the jewellery segment in the June quarter, the lowest in about eight quarters.

The management, in a quarterly update, indicated it has recorded strong sales on the back of new product launches and studded diamond sales. The company managed to gain market share despite the overall muted demand and headwinds such as higher gold prices, a decline in wedding dates, and costlier credit for the sector.

The new launches included the Gulnaz collection in July in the studded jewellery segment as well as the contemporary silver collection under the Mia brand. The share of studded jewellery, which accounts for 25 per cent of jewellery segment sales is expected to increase. While the sector is going through a lean patch, the company continues to expand adding 16 Tanishq stores year-to-date translating to retail space addition of 35,000 square feet. The Jewellery segment is the largest of Titan’s businesses, accounting for over 80 per cent of its sales.

The company’s strong growth in the watches segment continued in the September quarter, on the back of new designs and higher marketing spends. The company has been expanding some of the formats in the watches segment which includes World of Titan, Fastrack, and Helios. The watches segment, which contributes 13 per cent to Titan’s overall sales, recorded a steady 15 per cent in the June quarter. In the prescription eyewear segment, the company is looking to increase the pace of sales growth by introducing products at affordable price points and consumer awareness campaigns. The company had achieved a growth of 19 per cent in the June quarter. Among other businesses, its Skinn brand has emerged as the largest-selling fragrance product in the department store format, both in terms of volumes and value. The company has launched a new variant in July.

Given the market share gains and 20 per cent plus revenue growth prospects, analysts believe the recent correction is an opportunity to accumulate as the stock is trading at an attractive 38 times its 2019-20 estimates.