Titan Q4 Preview: Profit, revenue seen rising in high double-digits

Titan Company anticipates robust Q4 earnings with strong growth in revenue and profit. The jewelry segment drives sales, with adjustments made to manage margin impact. International business expansion and GP margin decline are key areas to watch.

Consumer discretionary major Company is expected to put up a decent show on the earnings front with both topline and bottomline growing in high double-digits for the three months ended March 2024.

Revenue from operations during the fourth quarter is likely to rise up to 18% year-on-year, while net profit is seen growing 13% year-on-year, according to an average estimate of four brokerages.

The company has already reported 12% growth in its net sales, led by 18% growth in standalone jewellery business and 24% growth in emerging business segment.

Here's what to expect from :

Incred Equities

The growth in new buyers and same-store sales growth led the growth in the jewellery division. Both studded and plain gold are expected to grow at a similar pace. We estimate EBITDA/PAT growth of 18.6%/15.7% year-on-year, respectively.

Kotak Equities

We model 17% year-on-year growth in standalone jewelry sales (excluding sale of gold bullion; versus 23% growth in 3Q), partly impacted by a sudden rally in gold prices in March 2024, 14.4% growth in watches division and 2.4% decline in eyewear.

We expect standalone jewelry EBIT margin of 12.8%. We estimate a 40 bps year-on-year decline in jewelry EBIT margin (despite cut in franchise commissions) on account of rationalization of gold rate mark-up, aggressive exchange offers and marginal decline in studded share.

We note that Tanishq took some price corrective actions in Solitaires, but its contribution to the top-line is low and hence impact on overall margin is limited. Titan's FY24 jewelry EBIT margin guidance band is 12-13%. We estimate 9.9% EBIT margin for watches, and 7.2% EBIT margin for eyewear in 4QFY24.

Nuvama

For Titan, we build in a 15% growth in the Jewellery segment (ex bullion). This is a moderation from the 23% growth clocked in Q3FY24 as there has been some impact on demand due to the spike in gold prices in March. We build in 15% year-on-year growth in Watches and Wearables (Traction in wearables sustaining) and flat growth Eyewear segment.

For Jewellery segment margins, we build in a 12.4% margin, down 80 bps year-on-year, given the focus on market share gains and it is also inline with the guidance of 12-13% for FY24. Overall our standalone revenues come to Rs 10990 crire, up 13% year-on-year with EBITDA Margins at 10.7% and EBITDA at Rs 11800 crore, up 13% year-on-year.

Motilal Oswal

We expect revenue growth of 17.9% year-on-year. We anticipate the jewelry segment to grow by 18.5%, with a five-year revenue CAGR of 21.4%. GP margin is expected to decrease 70 bp year-on-year, while EBITDA margins remain flat year-on-year. Outlook on international business expansion is a key monitorable.

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