Mumbai: Watch and jewellery retailer Titan Industries Ltd is expected to post a nearly 40% rise in its Oct-Dec net, aided by firm Diwali jewellery sales and robust performance of its ‘Sonata´ watch brand.
“We expect jewellery volume growth in mid teens (percentage) and a similar growth in watches,” DSP Merrill Lynch analyst Arvind Bothra said in a note.
“Jewellery sales have been robust during the Diwali season as the sharp fall in gold prices led to good demand,” brokerage Motilal Oswal said in a research note.
“Further, a decline in returns of other asset classes fuelled demand for gold, it being considered as a safe haven,” the note said.
Titan, which gets 60% of its revenues from its jewellery business “follows a well-defined hedging strategy in place to hedge its exposure to gold”, Angel Broking analyst Raghav Sehgal said.
Titan has hedged 95-96% of the gold required for its jewellery business, which safeguards up to 57% of its top-line against the risks arising from gold price volatility, Sehgal said.
In 2008, MCX gold futures on the continuation chart soared to a record Rs14,320 on 10 October, up 35.1% from the close of 2007, before falling to Rs11,290 on 24 October, ahead of the Diwali festival on 28 October.
Its watch business is expected to benefit from the strong pickup in ‘Sonata´ brand and the launch of the ‘Fastrack´range, the Motilal Oswal report said.
Titan Industries has five watch brands, two jewellery retail chains - Tanishq and Goldplus - and an eyewear chain Titan Eye+.
The company sells watches under its premium brand Titan and economy brand Sonata.
Titan offers products across price points for both aspirants as well as affluent consumers and it is the only pan India watch and jewellery maker having high brand recognition, Angel Broking’s Sehgal said.
But high end products that come under lifestyle segment are expected to witness a slowdown, he added.
Analysts polled by Reuters expect Titan to post a 39.2% rise in Oct-Dec net profit to Rs428,75 crore. Net sales is seen rising 30.9% to Rs106,4 crore.
Titan is scheduled to report quarterly results on 30 January.