Consumer discretionary Titan is expected to report healthy revenue growth for the three months ended December 2023 period. The pre-quarter update from the company provides a glimpse of the company’s solid show in the quarter.

Revenues are expected to rise 25% year-on-year (YoY), mainly driven by yet another strong quarter for the jewellery business. Net profit for the same period is seen growing up to 27% YoY. Q3 will likely be the fourth consecutive quarter of 20% growth in revenue.

The company has already reported 22% growth in standalone revenues for the December quarter. It added a total of 90 stores during the quarter, taking the group’s total presence to 2,949 stores. At the end of the September quarter, Titan had 2,859 stores.

Higher raw material prices would likely lead to a decline in gross and EBITDA margins in the reporting period.

In the preceding September quarter, Titan recorded a 10% growth in net profit to Rs 940 crore. Revenue from operations grew by 34% YoY to Rs 11,660 crore.

Here’s what brokerages expect from Titan’s Q3

Sharekhan

We expect consolidated revenue to grow by 31% YoY, led by 22% YoY growth in the standalone business and 27% YoY growth in the subsidiaries. In the standalone business, the jewellery business is expected to grow by 23% YoY, the watches and wearables business by 21% YoY while the eyecare business is expected to decline by 3% YoY.

Motilal Oswal

We expect revenue growth of 25.1% YoY on account of Wedding and the festive season. We anticipate the jewelry segment to grow by ~25.4%, with a four-year revenue CAGR of 23.6%. GP margin is expected to increase 190 bp YoY and 60 bp YoY respectively. Outlook on international business expansion is a key monitorable.

Kotak Equities

We model 19% YoY growth in standalone jewelry sales, led by good festive and wedding buying but partly impacted by the shift in inauspicious period (‘Shradh’) to 3Q this year versus 2Q last year and rise in gold prices and 18% YoY growth in watch and eyewear (aided by store growth) segments.

We expect a standalone jewelry EBIT margin of 13%. We expect a flat YoY trend in jewelry EBIT margin on account of the rationalization of gold rate markup, aggressive exchange offers, and strong growth in the South. We note that Tanishq took some price corrective actions to solitaires, but its contribution to the top line is low and hence impact on the overall margin is limited. Titan’s FY2024E jewelry EBIT margin guidance band is 12-13%. We estimate a 13.3% EBIT margin for the watches and a 16% EBIT margin for eyewear in 3QFY24.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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