Titan Company Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manoj Menon - ICICI Securities - Analyst : Just on the jewelry bid, there are two questions or clarifications. One, what would be the SSP for the quarter? And what would be the new store growth?

Question: Manoj Menon - ICICI Securities - Analyst : Yes. So I thought it's [NFL], right? So not [SSD]. Is there a difference in definition here of NFL and SSD?

Question: Manoj Menon - ICICI Securities - Analyst : Just our term versus -- because [Domino's] for example, define NFL and SSD has two distinct in factory. So it's just the same thing, right? Any stores, which has been around for more than a year. Okay, sure. Just as a quick follow-up on the Nebula. Do you see a possibility to, let's say, accelerate the store expansion over the next 12, 24 months, given the, let's say, what you highlighted in the analyst meet also on the competitive context changes. Is there a portion -- accelerate expansion -- word land grab? Is that a possibility?

Question: Manoj Menon - ICICI Securities - Analyst : Only jewelry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Manoj Menon - ICICI Securities - Analyst : Loud and clear, I must say that we visited recently the Chennai -- store, I could see the transformation. I could get are were you are coming from. Second and last question, I'll come back in the queue. So recently, we noted the custom CP reduction, which has been fairly material. There is a consensus expectation that look, GST can increase. Now I'm just -- I just want to only understand from this historical experience, let's say, if I'm trying to think about hypothesis of GST of 3% looks like a 5% or 7% print, how does the consumer behave in that context? Because, let's say, in a INR5 lakh bill, let's say, I see GST a separate number, which is INR50 number. supported suddenly, that increases to 25%, 35%. The worry or the concern here is in that sort of a scenario, can it -- so there is a reversal of formulization because it's a separate expense the customer gets to see because I'm not sure the normal consumer really understand the unbundled way of calculating gold price. So it just one number we sight? And then this is an expense. So historical employment, let's say, state VAT or GST, et cetera, are you -- how has that transition? Unidentified Company Representative Not an easy one to answer, Manoj, but I would say that, sure, the store of value challenge comes in, then I have to pay something which I don't get back. But I don't think the formalization is at all going to be lost. Too many things that have happened in the country for people to buy respectable things and live with life with holding their heads high and spend the money in a straight way and all that kind of things. So I don't think in the margin, it may happen, but that's not something that we are thinking at all. The government may be wanting to do that for mopping up part of what jewelry, but from a customer side, I don't think -- we'll go back to Ajoy, who will give up -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Avi Mehta - Macquarie Group - Analyst : Sir, I just wanted to kind of understand the jewelry growth a little bit more. You pointed towards multiple headwinds. I understand you said was the volatility in gold prices. Now I just wanted to appreciate what is it that gives us confidence that competition is not a concern, and it is more of this volatility. If you could give us some understanding on that, please? And whether MP segments have moderated sequentially.

Question: Avi Mehta - Macquarie Group - Analyst : Sir, I may not have come across correctly. And what I meant is that, that has not been the key reasons for weakness versus last quarter. It's more an industry phenomenon, how I read it. And there is no material change in that competitor intensity how I had to comment, but I wanted to kind of just appreciate if that understanding is correct.

Question: Avi Mehta - Macquarie Group - Analyst : Okay. Got it. Sir, the second bit I wanted to understand your comment on the custom duty, A, is there any quantum that you could share on what is likely? And b, does this, in any way, moderate the discounting pressures in delta studied margins, either in terms of the overall quantum or in terms of period of impact, how do you -- would that be a possibility?

Question: Avi Mehta - Macquarie Group - Analyst : Got it. And the quantum, and I thought would you be able to share the lightly near-term?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : During the analyst meet, we indicated some margin pressure related to our ability to charge the making charge in the wake of sudden spike in gold price. But when we see our Q1 margins, it has actually improved 20 basis points, and this is despite the lower stale growth. So I wanted to check on the drivers of this margin improvement for Q1? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Got it. And these cost optimization levers are expected to continue in the coming quarters as well, right?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Got it. That's very helpful. Second question is more on a slightly longer time frame. So globally, leading jewelry players are catering to more consumption occasions as well. There are -- their presence is also into services and customization, et cetera. In light of rising competition, what is your thought process on these aspects?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Got it. In terms of consumption occasions, Ajoy, do you see some white spaces here, which we can cater as a leader? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : I was more asking from leisure, casual from these occasions perspective?

Question: Aditya Soman - CLSA - Analyst : Sir, two questions. Firstly, can you give us a sense of the contribution in the jewelry business from the overseas stores? And secondly, are we seeing any sort of underlying change in the demand environment post this custom duty got any sort of sense in whatever days that you've had.

Question: Aditya Soman - CLSA - Analyst : Understand. Very clear. And just to follow up on that, I mean, this also coincided with your activation, right, or the coincides actually -- so how has that played out?

Question: Percy Panthaki - IIFL Securities - Analyst : So my question is on the custom duty cut. So while the custom city has been cut materially still the gold price today is only 5% below the all-time high. And 5%, that kind of volatility can happen on a day-to-day basis. I mean, it's not a material sort of drop. So how much do you think can this small cut really spur the demand by?

Question: Percy Panthaki - IIFL Securities - Analyst : Got it. Secondly, just wanted to understand the competitive dynamic here. So this was a weak quarter and even so more because wedding season was very weak. And the other large, listed player has a higher share of wedding jewelry than us. And yet DRSS is 12%. We -- so how do we look at this? And is there any sort of -- I mean, in terms of market share within the organized player, is there some decline that you see? Or whatever is this differential is made up by some of the other organized players doing both?

Question: Percy Panthaki - IIFL Securities - Analyst : Any reason for the differential performance?

Question: Percy Panthaki - IIFL Securities - Analyst : Got it. And last quick question on margins versus your guidance in the analyst meet a couple of months earlier. Is there any sort of tilt towards upside or downside in terms of confidence around those numbers? I know it's too early to change the guidance. But just in terms of the confidence, is there an upside or a downside risk to that number?

Question: Percy Panthaki - IIFL Securities - Analyst : Yes, that I'm treating as a one-off in years.

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : More curious to understand, our focus recently, I'm saying that there are a lot of impetus on store opening on Zoya and Mia, not [CaratLane]. So maybe if I look back, I think if you want to help us to understand what is the value contribution non-Tanishq will have broadly? I mean, not specific.

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : Okay. And the reason why we are pushing a lot of Mia is that you think there is an ample opportunity beyond CaratLane. Unidentified Company Representative I think there's opportunity for both CaratLane and Mia, and there are six, seven other players in the market. So if you think of it, the market size of younger, modern audience is pretty large in India, you're talking about [40 million, 50 million] addressable pieces and I don't think put together, we are able to address even less than 10% or 15% of that market. So as more and more players are also there, it is actually quite good to have multiple horses in play pretty much if you think of an F1 race, there were more than 1 car for a Ferrari or a McLaren, et cetera. So it's actually good that we are able to dominate that part of the market. As I shared in the Investor Day, between Tanishq, Mia and CaratLane we are a significant here in the portfolio play in terms of buyer growth, acquiring new buyers is very good. And hence, the opportunity is large, very large for both brands CaratLane and Mia, we don't see the reason to hold one back for the benefit of the other. I mean both can grow.

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : Okay. No, why I'm asking this because if last two quarters, if I see, our exchange used to be one-third to I don't know what this quarter is, but if the exchange is strategically coming down, will it have a direct impact on our revenue growth momentum?

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : It would be 35 --

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : It would be around 35%.

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : No, I was just more asking curiously, Ajoy. If the exchange is the one of the component of buying the high-value jewelry and if the gold prices are higher, that will also include the customer decision. So that's what I was more curious that if the customer has had a different thing.

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : Okay. My second and last question to Suparna. It's hardening to see that fast volume growth is upward of 16%. Is there any specific regional changes we have done in terms of promotions or penetration or offers?

Question: Shirish Pardeshi - Centrum Broking Limited - Analyst : I'm asking this question. If this volume continues, there will be some mix change towards the second half. And that's why very that if we have the margin guidance, whether we will be able to continue with that margin guidance.

Question: Nihal Mahesh Jham - Ambit Private Limited - Analyst : The first question was, again, to the jewelry segment that from the way we look at it, the competitive intensity looks like it is here to say, given the rise of some of the organized players. Historically, have you seen some triggers, which has helped to moderate competition? Or do you think this is a new reality going forward?

Question: Nihal Mahesh Jham - Ambit Private Limited - Analyst : Absolutely. I had a second question, which was on the charge that we saw that just to clarify, the impact of this charge, which is related to the factor in import duty is mainly on the gold on lease portion out of the outstanding on the day of the budget, right? Or is it going to be some impact which could continue going forward?

Question: Nihal Mahesh Jham - Ambit Private Limited - Analyst : Understood. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Vivek Maheshwari - Jefferies - Analyst : My first question is, over the last decade at different points of time you have given your market share and your aspirations. But when currently, when you look at market shares today, do you look at the total did market, which is where you want to gain the market share? Or do you also look at within organized? Do you want to hold on to market share or do you want to gain market share? Because let's say, by your admissions you are seeing competition will rise in the organized space. Does that mean that from an overall market perspective, you may gain share, but within unorganized, so win organized email those? How do you think about this share from an organized perspective?

Question: Vivek Maheshwari - Jefferies - Analyst : Got it. The other thing [Venkat] and team, and we have asked this at different points of time, but given how situation is on the scenarios emerging particularly in the developed markets, in your Tanishq network, do you see customers asking for, let's say, lab-grown diamond increasingly?

Question: Vivek Maheshwari - Jefferies - Analyst : Got it. Got it. And a very small question for Ashok. Just from my understanding, I'm sorry, with a very nice question. But in the case of gold exchange, there is no GST implication or is there? On the gold itself. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Vivek Maheshwari - Jefferies - Analyst : No, sorry. My question is the GST impact will be only on the differential, which is the gold -- which is the making charge, right? On the gold itself, if I give my go to you, you give me back the gold and whatever making charge that you charge me on that, there will be a GST because it's my gold, which I'm giving you and giving me back, assuming I give you 100 units and you -- Unidentified Company Representative These are two different transactions. We are buying. We are taking from you, and we are selling it to you.

Question: Siddhant Dand - Goodwill Warehousing Private Limited - Analyst : My first question was regarding the CaratLane leadership changes. So has this affected the business? And have there been other leaders who have exited lately?

Question: Siddhant Dand - Goodwill Warehousing Private Limited - Analyst : The management -- so there's been leadership changes as Caratlane, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Siddhant Dand - Goodwill Warehousing Private Limited - Analyst : Okay. Perfect. My second question was regarding -- there's a big difference in control and stand-alone profit. So is this largely the losses in the international business? Unidentified Company Representative There are two elements, apart from losses in the international business, there is one-off item, which has been explained in our presentation. We had a $2 million loan extended by our US subsidiary, TCLMA to an entity, recoverability of that has come under question mark. So we have fully provided for that. So that's kind of a one-off item also sitting there.

Question: Akshen Thakkar - Fidelity International - Analyst : Yes. So some of my questions have got answered. So I want to take them just wanted to congrats the impact on the book, really love reading your perspective in details. Thanks for writing the book. Question -- one question was around the lab grown diamond. I know it's work in progress. So you guys, you said you are monitoring data. But when you speak to customers, have you seen resistance like you said, some people are asking for guarantee, et cetera. How can you provide that guarantee? I mean live understanding but from what we understood, it's very difficult to differentiate on polished on what is natural and what is lab grown. So do we have that kind of control on our sourcing that we can give that guarantee to the customer? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Akshen Thakkar - Fidelity International - Analyst : I'm just trying to think is that something that we can publicize and advertise because like the carat meter was a differentiator then would this be a differentiator.

Question: Akshen Thakkar - Fidelity International - Analyst : My second question was just the difference in EBIT margins between consolidated and stand-alone in jewelry, if the margin seems to be low in the implied subsidiary numbers. I don't know if that's to do with only the extraordinary or there was something more of play over that? Unidentified Company Representative No, it is lower in the subsidiary outside in the subsidiary is scaling up. But our expectation is that as they grow, their margin profile certainly should improve. But of course, in this quarter, it has not happened. So that's the reason. But eventually, when we spoke about even Annual Investor Day, over two to three years' time frame, we believe that subsidiary, which is CaratLane should scale up as well as improve the EBIT margin profile.

Question: Latika Chopra - JPMorgan - Analyst : Two questions from my side. The first one was on your comment that the high-value [trades] jewelry has been subdued. And you've signed in with the part that I think Ajoy mentioned this time, the activation started to making earlier. I wanted to understand in this activations, are we making any specific interventions to incentivize the customers to buy more of high-value states? And any early signs of any kind of feedback in customer behavior changed towards this segment? That's the first question.

Question: Latika Chopra - JPMorgan - Analyst : Sure, sure. The second one was on the cost of duty reduction. Just trying to understand, I know it's an any, but you did talk about a better demand coming back. But do you also think some bit of later demand in the year because of wedding or activity getting a little bit more preform.\ And also, do you think there could be a scenario where the drivers could probably raise making charges a bit to kind of mitigate the impact on inventory losses because customers got used to a of high absolute taking shops when those prices are higher. Just trying to check if there's any thoughts there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 02, 2024 / 12:30PM, TITN.NS - Q1 2025 Titan Company Ltd Earnings Call

Question: Tejash Shah - Avendus Spark Institutional Equities - Analyst : Thanks for writing the book, it was a fantastic read. First question. See, as you have been highlighting for a while at the regional players are expanding nationally and formalizing a lot. Have you become a favorite hunting ground for talent? And have we earned an unwanted distinction of becoming CEO factory for the sector?

Question: Tejash Shah - Avendus Spark Institutional Equities - Analyst : Got it. And how are the recognition in this talent are we into the or homegrown talent? Or are we also looking for other industries or our industry to kind of that industry?

Question: Tejash Shah - Avendus Spark Institutional Equities - Analyst : So I just hope that you don't leave your family -- which has worked in Titan for -- work for any future talent before we think on that part. So just the one which you mentioned in the book, right? Just one request again, somebody also highlighted earlier, if you can increase the gap between the result of these and con call, we can have much more time to go through the accounts and have most of your discussion on numbers.

Question: Tejash Shah - Avendus Spark Institutional Equities - Analyst : Perhaps next year then.