ET Intelligence Group: Bucking the trend in the midst of a slowdown in Indian consumption, TitanNSE 2.50 %maintained a growth guidance of 20 per cent for the current fiscal. India’s largest jeweller said last fiscal was not so good, but things have started to change from the beginning of the current fiscal, said the company management in a call with the analysts. Beside consolidation from structural changes is also helping.

Titan is the fastest growing large consumer company and could outperform the industry with such growth. In terms of valuations, at 50 times FY20 expected earnings, Titan’s stock is slightly higher than the industry average of 45 times.

“We have seen a visible slowdown in the jewellery industry over the last two years. We know that most jewellers are in distress, which is a positive for organised player like us. Market share gain has been our story for the last two years,” said Subbu Subramaniam, CFO, Titan. “The market is so large, and we are only 5 per cent.”

Subramaniam refrained from giving any guidance on the margin front though he said with 20 per cent growth he expects operating leverage benefits to kick in. The company added a total of 115 stores with 130,000 square feet in FY19. Analysts expect a 34 per cent earnings growth for FY20.

Titan saw sales grow 23 per cent and net profit jumped 26 per cent in FY19. The company has been gaining on the back of higher sales from wedding jewellery.

“Wedding jewellery is now 20 per cent of the total jewellery sales from less than 10 per cent three years ago. We intend to take this to 35 per cent,” said Subramaniam. Wedding jewellery making involves higher complexities and margins are also higher. In FY20, there are 40 per cent more auspicious wedding dates than last year. Jewellery was 81 per cent of the revenues and 89 per cent of the total profit.

In the latest March quarter, Titan did sales of Rs 4,823 crore, 19 per cent higher year-on-year, and a net profit of Rs 353 crore, up 12 per cent. Profitability dropped due to inventory impact and provisions of Rs 145 crore made for investments in IL&FS group. The inventory hit may get adjusted in the coming quarters. Regarding IL&FS, the management has made the whole provision and if it receives any payment from IL&FS, it will be a gain.



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