FY17 guidance slightly at risk; Diwali sales gives hope:
Titan There has been a significant decline in the jewellery industry and it is important to factor that in, says S Subramanian, CFO, Titan. In spite of gold industry’s slowdown Titan saw a good quarter. Titan , a Tata Group firm that makes watches and jewellery, reported a net profit of 23.5 percent at Rs 181 crore in the second quater of this fiscal. The company saw a fall due to the flat jewellery revenues and weak watch segment. There has been a significant decline in the jewellery industry and it is important to factor that in, says S Subramanian, CFO, Titan. He said in spite of gold industry’s slowdown Titan saw a good quarter.
The company has grown significantly on gross margins. Maintaining his positive stance, Subramanian said that FY17 guidance is slightly at risk but this Diwali has given a lot of hope and things are possibly turning around. Below is the verbatim transcript of S Subramanian’s interview to Latha Venkatesh & Sonia Shenoy Sonia: Let me start off with the jewellery segment because there-there is a lot of disappointment that despite higher gold prices the jewellery segment could not perform in this quarter.
Should we expect the second half to be equally bad? A: Let me lay down the scenario as to what happened in the jewellery industry before we come to specifics on Titan. Frankly, it has been a very good quarter for us despite what is happening in the industry around. If you were to just look at numbers which have been published by the World Gold Council or for that matter the government there has been almost a 60 percent decline, a 59 percent decline in volumes of gold imported during this period April to September. In my own view, I think that would have resulted in at least 20-25 percent reduction in the jewellery industry topline growth. It is an industry which has been on decline, significant decline and I don’t think people are factoring that portion into this. In the background of that for us to have been flat and that too grow significantly on our studded jewellery share has been a very good story. We have grown significantly on gross margin. Let me just explain a little more to you, you know that we have basically three categories, plain gold jewellery, we have gold coins and we have studded jewellery. Studded jewellery is where the margins are substantially higher than the other two categories. In gold coins the margins are very low. Plain gold jewellery is somewhere in between. The impact has largely been on the plain gold jewellery and importantly on the gold coin segment. Studded jewellery we have actually grown substantially. We have had one of our best activations ever. That is reflecting in the higher gross margins that we have shown. Therefore, if you look at our bottom line a growth in about 30-35 percent is very good considering the situation that one was in. I think it is important to understand the background under which the industry was working.
People would say that we had the advantage of the golden harvest scheme in this quarter vis-a-vis the quarter in the previous year which did not have that. However, the point is that this is an industry in decline and therefore I think we believe we are gaining market share significantly both in the plain gold and in the studded segment. So, that is one aspect. Coming to this quarter, October the Dussehra-Diwali season we have done very well. We have grown 42 percent over last year’s same season. We are not talking about the month of October but we are talking about the season. So, it has been one of the best Diwali ever that we have seen. Our Dhanteras sales has been outstanding and I think it is sort of signalling possibly the end of the consumer keeping away from this category and for that matter even watches did very well. We grew very well in watches during this Dussehra –Diwali season. So, one is hoping that the sentiment has changed at least post October.
Read more for HNI Stock Tips-http://www.aceinvestmentadvisory.com
Titan There has been a significant decline in the jewellery industry and it is important to factor that in, says S Subramanian, CFO, Titan. In spite of gold industry’s slowdown Titan saw a good quarter. Titan , a Tata Group firm that makes watches and jewellery, reported a net profit of 23.5 percent at Rs 181 crore in the second quater of this fiscal. The company saw a fall due to the flat jewellery revenues and weak watch segment. There has been a significant decline in the jewellery industry and it is important to factor that in, says S Subramanian, CFO, Titan. He said in spite of gold industry’s slowdown Titan saw a good quarter.
The company has grown significantly on gross margins. Maintaining his positive stance, Subramanian said that FY17 guidance is slightly at risk but this Diwali has given a lot of hope and things are possibly turning around. Below is the verbatim transcript of S Subramanian’s interview to Latha Venkatesh & Sonia Shenoy Sonia: Let me start off with the jewellery segment because there-there is a lot of disappointment that despite higher gold prices the jewellery segment could not perform in this quarter.
Should we expect the second half to be equally bad? A: Let me lay down the scenario as to what happened in the jewellery industry before we come to specifics on Titan. Frankly, it has been a very good quarter for us despite what is happening in the industry around. If you were to just look at numbers which have been published by the World Gold Council or for that matter the government there has been almost a 60 percent decline, a 59 percent decline in volumes of gold imported during this period April to September. In my own view, I think that would have resulted in at least 20-25 percent reduction in the jewellery industry topline growth. It is an industry which has been on decline, significant decline and I don’t think people are factoring that portion into this. In the background of that for us to have been flat and that too grow significantly on our studded jewellery share has been a very good story. We have grown significantly on gross margin. Let me just explain a little more to you, you know that we have basically three categories, plain gold jewellery, we have gold coins and we have studded jewellery. Studded jewellery is where the margins are substantially higher than the other two categories. In gold coins the margins are very low. Plain gold jewellery is somewhere in between. The impact has largely been on the plain gold jewellery and importantly on the gold coin segment. Studded jewellery we have actually grown substantially. We have had one of our best activations ever. That is reflecting in the higher gross margins that we have shown. Therefore, if you look at our bottom line a growth in about 30-35 percent is very good considering the situation that one was in. I think it is important to understand the background under which the industry was working.
People would say that we had the advantage of the golden harvest scheme in this quarter vis-a-vis the quarter in the previous year which did not have that. However, the point is that this is an industry in decline and therefore I think we believe we are gaining market share significantly both in the plain gold and in the studded segment. So, that is one aspect. Coming to this quarter, October the Dussehra-Diwali season we have done very well. We have grown 42 percent over last year’s same season. We are not talking about the month of October but we are talking about the season. So, it has been one of the best Diwali ever that we have seen. Our Dhanteras sales has been outstanding and I think it is sort of signalling possibly the end of the consumer keeping away from this category and for that matter even watches did very well. We grew very well in watches during this Dussehra –Diwali season. So, one is hoping that the sentiment has changed at least post October.
Read more for HNI Stock Tips-http://www.aceinvestmentadvisory.com
No comments:
Post a Comment