Titan shares post worst single-day move in over 4 years on earnings miss

Titan's worst day in over 4 years: Shares of Tata Group-backed jewellery retailer, Titan Company, fell as much as 7.02 per cent to hit an intraday low of Rs 3,287 on the BSE, posting their worst day since March 18, 2020, after it missed earnings estimate in last quarter of financial year 2024 on higher gold prices and bigger discounts.

Titan on Friday announced fourth-quarter profit that fell below expectations, attributed to its offering of discounts on products to attract customers amid high gold prices.

Analysts and traders noted that the surge in gold prices could dampen demand, particularly during wedding season, a critical period for the country, which is the world's second-largest consumer of gold. Consequently, many retailers have resorted to substantial offers to entice buyers.

In its earnings presentation, Titan acknowledged a soft demand environment due to "volatile and elevated gold prices," necessitating promotional efforts to drive customer acquisition.

These discounts proved effective in drawing more buyers to Titan's stores, resulting in a 19 per cent increase in revenue in its jewellery business, which includes brands like Tanishq and CaratLane, constituting nearly 90 per cent of its revenue.

However, this growth fell short of the 23 per cent reported in the same period last year. Overall revenue, encompassing its smaller watches and eyewear businesses, rose by 17 per cent, while expenses increased by 18 per cent, partly due to the higher gold prices.

During the reporting quarter, gold prices surged by 8.2 per cent. The combination of rising gold prices and larger discounts contributed to a contraction in Titan's earnings before interest and tax margin, which dropped to 11.1 per cent from 12 per cent.

Titan recorded a profit of Rs 786 crore in the quarter ended March 31, marking a 7.1 per cent increase from the previous year. However, this figure fell short of analysts' expectations of Rs 799 crore, according to data from LSEG.

As of 12:30 pm, Titan shares traded 6.57 per cent lower at Rs 3,303, underperforming the Nifty which was up 0.2 per cent.