Citing consumption fatigue, Titan indicates at weak Q2

Titan, the watch-to-jewellery maker has indicated at the chance of a weak September quarter, citing consumption fatigue is setting into the consumer discretionary business. Sales of gold jewellery remained subdued in this quarter, the export and services business in watches was under pressure and growth in eyewear had reduced.

The base demand was weak. The customer today seems enthused only by new and variegated offerings, owing to the year-long discount/deals accessible online and offline. Though studded jewellery sales exceeded expectation, muted gold jewellery sales affected overall revenue growth.

Titan obtains 75-80 percent of revenue from branded jewellery and the rest largely from watches, eyewear and accessories.

Analysts hope the September quarter to be a muted one for fast-moving consumer goods. They feel that on a long-term basis the environment should upgrade since the government gives greater attention to job creation in urban areas and improvement of farm incomes in rural areas. In consumer discretionary, the trends seem mixed, with food, fashion and cinema (multiplexes) picking up, while jewellery retail displays signs of a slowdown.

In the past few years, Titan has been looking at newer areas for growth as it looks to hedge itself from the risks of its core business. The company had also entered into a joint venture with Mont Blanc International, a subsidiary of Richemont Group SA, marking its presence in the luxury space.

While the financial year 2015-16 was a tough one for Titan, net sales reduced 5.3 percent y-o-y to touch Rs 11,277.9 crore and net profit reduced 15.5 percent +Headings to Rs 689.4 crore, the coming years should be better, analysts said.

In his quarterly update, it is said the second half of financial year 2016-17 saw the festival season at the same time some wedding dates, which, along with low inflation and Seventh Pay Commission related liquidity, could augur well for demand revival.

As of now, Titan share price is trading at Rs. 386.55(up by 0.12 per cent).

Titan is analyzed by Dynamic Levels as the top 500 performing stocks for this quarter among the 1700 stocks which are listed on the NSE. 

In order to know about the support and resistance levels of the scrip and also its fundamentals and financials, please a pay a visit to Titan share price history.