Titan Company Ltd Q4 2025 Earnings Call Transcript

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

Question: Manoj Menon - ICICI Securities - Analyst : First of all, good luck to Venkat for all the future endeavors and good luck to Ajoy as you take on the new role. Good luck and God bless to both. A couple of questions from my side on the jewelry business. One, given the incesent price increase, which you have seen in the gold commodity, just some snippets from you in terms of your research as well as anecdotal evidence on what the consumer telling you, right? And so is the consumer cutting back on the volume side of it? Is the consumer asking for more 18 carat? And more importantly, what -- how do you see this evolving? And what are the plans in place? That's the first one.

Question: Manoj Menon - ICICI Securities - Analyst : That's a fair one, sir. And quickly on the second one, as I understand the diamond prices, let's say, in the wholesale market has declined materially over the last few years, whereas in the retail market, it is probably flat. Now I'm thinking from a consumer point of view who, let's say, bought diamond from any jeweler two, three, four years back with, let's say, an explicit or implicit understanding that I can actually come and exchange it at the market price. Now is there a situation where consumers are coming and looking for an exchange and realizing that my diamond prices has not inflated at all where gold? And does that have any implication for, let's say, what he or she is buying today in an exchange? Is he preferring more gold over studded or diamonds rather?

Question: Avi Mehta - Macquarie Group - Analyst : Just wanted to spend some time on the jewelry margin. Could you please help clarify this overhead management, which you carried out this quarter? And how sustainable are these gains? Essentially, the context is that despite a weakening mix, we have seen almost 12% stand-alone EBITDA margin. And hence, is there an upside possibility to that 11% to 11.5% range that you were indicating prior to this quarter?

Question: Avi Mehta - Macquarie Group - Analyst : Got it, sir. Fairly clear. Sir, and the second and last bit is on the demand side. Now you did clearly allude towards the consumer behavior asking for more value, more making charge, and we have been able to deliver that in this quarter as well, it seems like. Now if I were to look at this going forward for FY26, how would you parse the growth? Are you in a scenario where the last year is giving you confidence of sustaining upwards of 15%. If you could give some sense on how should we look at the next year? That's all from my side.

Question: Avi Mehta - Macquarie Group - Analyst : I meant sales growth, sorry, jewelry sales growth when I say how should you -- if you were to look at your earlier midyear targets and what kind of is expected for the next few years on a simple average basis, it does imply upwards of 15% to reach that 2.2x to 2.5x and that context where I was come. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call

Question: Avi Mehta - Macquarie Group - Analyst : But Ajoy, do you see international at risk because of this tariff talk, et cetera? Or is that not anything to get so much bothered about?

Question: Videesha Sheth - Ambit Private Limited - Analyst : Congrats on the numbers. My first question was on the competitive landscape. Last quarter, you had mentioned that the element or the competition element on the gold pricing has stabilized, but on making charges, it was still elevated. So given the inflation that we've seen in the fourth quarter, can you comment on how the landscape has changed? That is my first question.

Question: Videesha Sheth - Ambit Private Limited - Analyst : Got it. Got it. And the second question was on the studded jewelry part of things. As a category leader, how would you think about reviving consumption in this segment going forward? While the DBS partnership is a step in that direction, but any other -- have you identified any additional initiatives on this front that could stimulate demand?

Question: Videesha Sheth - Ambit Private Limited - Analyst : Understood. That was helpful. Just a small follow-up to this on the CaratLane and you launching the 9 carat -- had the 9 carat as well. But given it's not hallmark in nature, how do you expect consumers to react.

Question: Arnab Mitra - Goldman Sachs - Analyst : Congratulations on a great performance across all the businesses. My question again was on studded. And where I'm coming from is when we anecdotally speak to a lot of people who historically have owned diamonds, the rich families, that segment seems to almost suggest anecdotally that we are not going to buy diamond or they are going to buy much lesser of diamonds going ahead. But your growth rates, buyer growth are all REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call very good. So are we like dealing with completely different sets of consumers here? Are you getting the growth from people who are buying diamond for the first time in your view? Just trying to understand this disconnect that a lot of people feel between when you speak to anecdotally and versus actual numbers, which show good growth for you.

Question: Arnab Mitra - Goldman Sachs - Analyst : Right. So from the data that you gave, which is buyer growth being pretty strong, that -- the fact that the value growth is not keeping up is purely a function of the fact that gold is a smaller component of the jewelry and therefore, the unit price hasn't gone up as much as gold?

Question: Arnab Mitra - Goldman Sachs - Analyst : Got it. Got it. And my last question was just on this -- we had obviously a lot of news around lease costs going up during the quarter due to tariff speculation. So has it impacted this quarter in any way for you? And is there any lingering impact going forward on that? That would be my last question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call

Question: Kunal Vora - BNP Paribas Exane - Analyst : Yes. Just one question. I hear from the market that the wholesale price of LGD have again crashed in recent months. What are you picking up about the state of LGD retailers? And is LGD coming up in your conversations? Also, if you can update us on your latest views on entering the LGD space?

Question: Kunal Vora - BNP Paribas Exane - Analyst : And what about your thoughts on entering this space? The drop in prices, does it make it completely unviable? Or would you give it a thought at some stage?

Question: Percy Panthaki - IIFL Securities - Analyst : Just wanted some clarity on this hedging gain. So my understanding was the purpose that we hedge is that the EBIT margins of the business remain unaffected by any volatility in the gold price, but you're saying that the reason why margins are higher is because of some hedging gains. And the second question related to this is that when the gold price is going up, we should actually have a hedging loss because we are recovering higher from the consumer. And to offset that inventory gain, actually, we are entering into a future contract. So that contract should give us a hedging loss. So can you just address these two issues, gaps in my understanding, please?

Question: Percy Panthaki - IIFL Securities - Analyst : Understood, sir. Understood. So this contango gain is a onetime permanent gain or will it reverse next quarter?

Question: Percy Panthaki - IIFL Securities - Analyst : Okay. So part permanent and part phasing. Is that how I should take it?

Question: Percy Panthaki - IIFL Securities - Analyst : Understood. Sir, second question is on the outlook for jewelry growth next year. So see, while the gold price inflation has definitely dampened the buying sentiment, number of buyers are coming lower, et cetera. But still, there is some amount of inflation, which is sort of at least partially benefiting us because the gold price has, let's say, doubled in the last three to four years almost. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call So the person will not cut down his volume by half. He might cut down his volume, but there is still a net-net gain in the overall outlay per customer. And that has benefited and you have done close to about 25% kind of top line growth this quarter. So my question is that if we assume that the gold price remains where it is currently, then should we expect this 25% kind of top line growth to continue for the next two to four quarters?

Question: Percy Panthaki - IIFL Securities - Analyst : Got it, sir. If I might just push this a little bit, can we say that the growth rate trajectory has possibly, at least in the next couple of years, moved up from a high teens to slightly higher than 20%?

Question: Vishal Gurka - ASk Investment managers - Analyst : Congrats on a good set of numbers. Sir, I have one question on the franchisee format. So my channel ticks are suggesting that you're piloting a format where capital will be provided by franchisee and you'll be running the store. I think Kalyan runs similar kind of store. Is this true? And if it's true, then historically, capital has never been a challenge for us. Just wanted to get your comments on this. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call

Question: Vishal Gurka - ASk Investment managers - Analyst : Sir, just one bookkeeping question. What is the store opening guidance for Tanishq for FY24 domestic business? How many we are planning to open?

Question: Vishal Gurka - ASk Investment managers - Analyst : Got it. Got it. And the 50, 60 stores, most of them will be L1 format, right, for you?

Question: Vishal Gurka - ASk Investment managers - Analyst : No, sir, I'm talking about the renovation part. You told us 50, 60 stores you are planning to renew further. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Congratulations on a great performance. Sir, from a balance sheet perspective, there has been an increase in our working capital, and that has sort of led to some fall in our return ratios also. This is obviously due to increase in gold price and the related fall in volume consumption. How do you plan to deal with this as gold prices are continuing to increase? There is a significant working capital increase. So how do you plan to deal with this?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Understood. Ashok, also, if you are open to sort of call out the exact quantum of the hedging gain this quarter, you are calling that out?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Understood. Sir, last question from my end. The overall jewelry UCP is 20%. Can you call out the secondary growth in studded sales? So reported is 12%. What is secondary growth in studded sales for Q4?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Almost similar, okay.

Question: Jaykumar Dosh - Kotak Securities Ltd - Analyst : My question is on industry practice of exchange and cash back in case of studded jewelry. Now in a hypothetical scenario, if the consumer behavior changes and if consumers start sort of exchanging more studded jewelry in future and buy gold jewelry or basically take cash back. So that could have a significant impact on profitability for overall industry. So I was just wondering, is this something that comes up in Board discussions or industry association discussions as an industry leader, how comfortable are you with this policy that you have today, where basically anyone who has potentially bought any state from you in the past 10, 15 years can always come back and give it to you at 10% lower price or 15% lower price versus the current pricing? And that's because partly, there's a big gap between your procurement cost for diamond and your retail pricing for diamond. So I want to understand from a risk management perspective, is this something which you think about?

Question: Jaykumar Dosh - Kotak Securities Ltd - Analyst : Understood. So basically, exchange proportion is broadly similar, and that has not changed, whether it is for gold or diamond in the last --

Question: Jaykumar Dosh - Kotak Securities Ltd - Analyst : Very helpful, very clear. Second question is, in FY25, your stand-alone jewelry growth was 21% and EBIT growth was 12%. Now with you maintaining your EBIT margin guidance and ballpark expecting growth to be in 15%, 20%, do you think FY26, even notwithstanding the volatility in gold you have seen and the mix changes that we continue to see, do you think that, that gap will now narrow? I mean, your EBIT growth also will be ballpark in that range, 15% to 20% or maybe a couple of percent points short of top line growth?

Question: Jaykumar Dosh - Kotak Securities Ltd - Analyst : Congratulations, Ajoy, on your appointment as MD.

Question: Tejas Shah - Spark Capital Advisors (India) Pvt. Ltd. - Analyst : Congrats on a good set of numbers. Sir, just one question to the team. So you mentioned that our wait and watch stance on LGD continues. But just to clarify, is the focus on assessing long-term customer relevance of this offering? Or are we still evaluating the economic viability of the business model here?

Question: Tejas Shah - Spark Capital Advisors (India) Pvt. Ltd. - Analyst : Okay. And is this read-through seen across our engagement with customers here and abroad? Or is it changes because the store of value understanding also changes?

Question: Tejas Shah - Spark Capital Advisors (India) Pvt. Ltd. - Analyst : No. So is this read-through on customers, is it same across in India and abroad or abroad because the store of value dimension is different. Over there, it is slightly different than how we are reading customers in India on LGD. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 1:30PM, TITN.NS - Q4 2025 Titan Company Ltd Earnings Call

Question: Tejas Shah - Spark Capital Advisors (India) Pvt. Ltd. - Analyst : Sure. And lastly, are there any regional nuance that we would like to call out in this quarter's number in terms of North, South or any read-through there on demand?

Question: Moksh Ranka - Aurum Capital - Analyst : All my questions have been answered.

Question: Vivek Maheshwari - Jefferies - Analyst : Three questions from me. First, on LGD, again, one more question. On the LGD side, is your worry more about, given you are the market leader in jewelry, you do not want to, let's say, create -- or create is a wrong word, I think, expand the market because we have seen someone like, let's say, a retailer like Trent, which has also entered into this. So is it more about you don't want to, in a way, cannibalize your own business by existing diamond business by creating more awareness. Is that the hesitation -- reason for hesitation?

Question: Vivek Maheshwari - Jefferies - Analyst : Okay. And is your internal view also that LGD will have no impact on, let's say, natural diamonds or where you are on that bit?

Question: Vivek Maheshwari - Jefferies - Analyst : Got it. Got it. My second question is, there are obviously, at least globally, whatever, and I have admittedly very limited understanding on this, but I hear that part of the reason why natural diamond prices actually went down were because of LGD. But what we -- what -- there was a recent media article which said that natural diamond prices actually moved up 10%. I think this was in the month of March or April -- end of March, I think. Do you have any insights as to what drove this change? And is that something more -- I don't know secular is the right word or not, but I would still use that. So is there something which is happening, which is why natural diamond prices moved up?

Question: Vivek Maheshwari - Jefferies - Analyst : No, I appreciate. My last question is on the sequential basis, we have seen jewelry margins actually moving up. And Ajoy clarified that there is no major hedging impact because of which the margins have moved up. And our channel checks actually indicated in the last few months, given how gold prices moved up, especially in the fourth quarter fiscal, there was a lot of, let's say, discounts or making charges, promotions given by regional players, local players. why is it that this has not shown up in your numbers? What am I getting wrong over here?

Question: Vivek Maheshwari - Jefferies - Analyst : Right, right. I mean when I said sequentially, I mean, I was looking at all the rolling four quarters, for example. The only thing was what Ashok mentioned was there is no big impact of any one-off on the EBIT side, except the operating leverage, right? So in that context, basically, the discounting or whatever we saw on the ground, it was miniscule compared to -- or you did not face that pressure as much, except for a slight impact on gross margins, which got offset at the, let's say, due to operating leverage. Is that a fair understanding? Yes, I think you are right.