TITAN - Titan Company Limited Share Price

In the Q4 & FY'25 earnings call, Titan Company Limited's management delivered an optimistic outlook reflecting overall strong performance across segments despite external challenges such as fluctuating gold prices. The Managing Director, C. K. Venkataraman, emphasized the effectiveness of their innovation and execution strategies, stating that the company experienced satisfying performance owing to their robust operational capabilities and dedicated workforce.

Key forward-looking points highlighted include:

1. Jewellery Sales Growth: Management is targeting high double-digit growth moving into FY'26, although specific figures remain uncertain due to market volatility. They aim for guidance around 15% to 20% sales growth for jewellery, indicating a preparedness for various market conditions.

2. Margin Expectations: For the domestic jewellery business, management confirmed an expected EBITDA margin range of around 11% to 11.5%, suggesting no significant upside in the near term due to uncertainties around gold prices.

3. Consumer Behavior Insights: Management observed changes in consumer sentiment, with a noted shift towards lightweight and lower carat jewellery, as buyers are increasingly mindful of their budgets amid rising gold prices. This has led to an openness towards 18 carat and even 9 carat gold options.

4. Competition and Market Dynamics: The competitive landscape remains intense yet stable, with management noting that while some players are discounting aggressively, Titan maintains its pricing strategy without compromising on margins. The company is leveraging operational efficiencies and hedging strategies to manage cost pressures.

5. Store Expansion: Titan plans to open 40 to 50 new Tanishq stores in FY'26, alongside renovations and expansions in existing outlets to enhance customer experience.

Overall, Titan Company Limited is positioned to navigate the challenges ahead with a focus on growth, customer engagement, and strategic management of costs and operational efficiencies.

1. Question: Given the incessant price increase in gold, what is the consumer sentiment around buying?
Answer: Consumer sentiment shows that while there's hesitancy in the sub Rs.50,000 price range, demand for 18-carat gold is increasing. Although we're seeing customers wanting lighter and lower caratage jewellery, they still express the desire for gold within their budgets.

2. Question: If gold prices were to drop significantly, how would it affect your revenue situation?
Answer: A price correction would likely welcome more customers into the market, increasing volumes. We saw similar responses when duties were lowered before. It's a favorable situation where a drop in ticket size could be offset by higher buyer numbers.

3. Question: What is the outlook on jewellery margins and is there potential upside?
Answer: Current margins are 11.9%, with expectations of maintaining guidance between 11% to 11.5%. Given the uncertainties around gold prices, this remains a realistic target without other significant upward adjustments.

4. Question: How are you forecasting growth in FY'26?
Answer: We're aiming for high double-digit growth, but it's difficult to predict exact figures quarterly. Factors influencing this include ticket size growth and buyer behavior, all subject to market conditions.

5. Question: How is the competition landscape changing in your scenario?
Answer: Competitive intensity remains high, especially with pricing tactics from smaller and even larger players. However, our strategy involves maintaining value through customer experience and product offerings rather than intense price wars.

6. Question: Are exchanges and consumer behavior regarding diamond jewellery affected by price changes?
Answer: While there is some concern, past patterns indicate low exchange rates. The customer remains focused on appreciation rather than disjointing their jewellery from an investment perspective.

7. Question: What is your perspective on entering the LGD space?
Answer: We're continuously evaluating customer preferences regarding LGDs, focusing on distinguishing our value proposition. For now, the market isn't fully ready, making it prudent to monitor rather than rush into this segment.

8. Question: How have hedging gains influenced your margin reporting?
Answer: We've seen some gains from contango in our hedging activities, but it primarily reflects operational leverage and market conditions rather than being the sole driver of our margins.

9. Question: How do you view your working capital increase amidst rising gold prices?
Answer: The increase reflects gold price inflation and necessary inventory investment. We will leverage our GOL capabilities to manage it effectively, although we must remain adaptable to market fluctuations.

10. Question: What is the store opening guidance for Tanishq in FY'26?
Answer: We plan to open 40-50 new stores and also renovate or expand 50-60 existing stores. This continued investment in our network will help facilitate further growth in various markets.