Jewellery and watchmaker Titan on Tuesday reported a 23.1% year-on-year decline in consolidated net profit to Rs 704 crore for the quarter ended September, missing Street estimates by a wide margin.
The drop came amid a customs duty reduction announced during the Budget in July, the company said. A poll of analysts by Bloomberg had pegged the net profit at Rs 969 crore on the back of a revival in demand for gold.
Titan managing director CK Venkataraman said that the customs duty-related losses as well as the need to invest in various businesses had depressed profitability in Q2.
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The government had slashed import duty on gold to 6% from 15%, which was intended to reduce the price difference between domestic and overseas gold.
Revenue for the quarter rose 16% y-o-y to Rs 14,534 crore, ahead of Bloomberg consensus estimates of Rs 13,425 crore. The company said that the topline growth was led by good buyer metrics as well as double-digit growth in gold and diamond-studded products.
Earnings before interest, tax depreciation, and amortisation (Ebitda) for the quarter declined 12.4% y-o-y to Rs 1,236 crore, below Street estimates of Rs 1,566 crore.
Ebitda margins for Q2 narrowed to 8.5% versus 11.3% reported a year ago, a drop of 280 basis points. Bloomberg consensus estimates had pegged Q2 Ebitda margins at 11.7%.
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While the company’s revenues from its watches and wearables, the eyecare and jewellery segments fuelled domestic sales during the second quarter, profits from the jewellery segment fell nearly 20% y-o-y to Rs 974 crore. Last year, the jewellery segment profit stood at Rs 1,217 crore. Titan derives over 85% of its annual revenue and profit from the jewellery division.
Shares of Titan closed trade 0.23% higher at Rs 3,233.05 apiece on the BSE on Tuesday.
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