- 04 May 2022
- ICICIdirect Research
Titan Q4 margins disappoint; management remains upbeat on outlookTITAN - 2514 Change: 54.10 (2.20 %)
News: As guided by the management in its pre-quarterly update, the jewellery division (excluding gold bullion sale in both the quarters) reported 4% revenue de-growth. Titan’s jewellery division’s revenue growth trajectory disappointed on account of dual impact of Omicron covid variant in January and sharp rise in gold prices in March deferring the customer purchases. The company’s digital arm CaratLane (73% subsidiary) continued to perform well and registered a YoY revenue growth of 43%. Overall revenue (including gold bullion sale worth Rs 375 crore) grew by 4% YoY to Rs 7796 crore (I-direct estimate: Rs 7480 crore). Higher operating expenses resulted in EBITDA declining by 3% YoY to Rs 794 crore (I-direct estimate: Rs 853 crore). EBITDA margins declined 70 bps YoY to 10.2% (I-direct estimate: 11.4%).
Views: Despite various headwinds, Titan reported robust revenue growth of 36% YoY in FY22 and continues to be one the fastest growing discretionary companies (two year CAGR: 15%). The company has begun April on a very strong note and expects Q1FY23 to be healthy owing to a strong wedding season. It continues to have healthy cash and investments worth Rs 1500+ crore. Robust performance in challenging times reaffirms our thesis of long term market share gains for Titan. Titan has, over the years, withstood challenges and emerged as a resilient player. We believe Titan is a structural growth story and appears to be a key beneficiary of the unorganised to organised shift in the Indian jewellery market.