Titan Company Ltd on Acquisition of Damas Jewellery M&A Call Transcript

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

Question: Avi Mehta - Macquarie Group Ltd - Analyst : Yeah. Hi, team. Thanks for the opportunity. I just wanted to kind of understand the growth opportunity in Damas, especially given -- if you look at the historic sales over CY19 to '24, it's been largely flattish. If you could kind of just give us a sense on how do you see the opportunity here? What gives you confidence because while Tanishq you cited double digit on 15% to 20%, is that number something that you cite here as well? And just a related bit, what I'm trying to also appreciate is how should we look at the acquisition synergies in terms of margins, in turn to appreciate the EPS dilution accretion over the next few years?

Question: Avi Mehta - Macquarie Group Ltd - Analyst : Okay. Got it. Very clear, sir. Just if I may, more strategic, do you -- I hear you in the start that you want to look at this more -- you were kind of looking at an international footprint. So would you see this opportunity -- this is more like an attractive opportunity, which we have capitalized or a start of expansion into other international markets? I mean where I'm coming from is the history, unfortunately, is littered with consumer companies who found it difficult to make international expansions work. So would love to hear your thoughts on how we should look at it from a strategy perspective. That's all from my side.

Question: Avi Mehta - Macquarie Group Ltd - Analyst : Very clear. Thanks a lot. I'll come back in the queue. Thank you very much.

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Hi. Thank you, Venkat and Ashok, for the detailed rationale. Sir, some bookkeeping questions. The EV that we are paying is close to INR2,400 crore. Is there any goodwill component also in 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. JULY 25, 2025 / 10:00AM, TITN.NS - Titan Company Ltd on Acquisition of Damas Jewellery M&A Call

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Understood, sir. And where do you plan to raise this debt capital? And what is the expected cost of debt for this accretion? So whatever maybe the capital outflow that we are foreseeing. So I'm asking related to that.

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Fair enough, sir. Just lastly from my end. So Damas definitely is a strong brand, but in that particular part of the geography the purity of gold is unquestionable, right? And many retailers sort of sell basic designs set via zero making charge as well. So in my opinion, design is the only big differentiation in that part of the geography where Damas has an edge. Do you think that the turnover typically can be relatively lower because obviously, the investment customers may be purchasing from somewhere else, and also because design is the only component, so the brand may have relatively lower margins versus what we command in India?

Question: Devanshu Bansal - Emkay Global Financial Services Ltd - Analyst : Thank you, Venkat, Ashok. Thanks for taking my questions.

Question: Videesha Sheth - Ambit Capital Pvt Ltd - Analyst : Yes, hi. I hope I'm audible. My first question was, are there any changes in the business model of Damas that can be expected because based on the existing numbers, it seems that it's holding an asset-heavy model. So I just wanted to know how will the operating model evolve post-acquisition? Are we looking to convert any COCO stores into franchisee owned?

Question: Videesha Sheth - Ambit Capital Pvt Ltd - Analyst : Got it. The second question was on the sourcing bit. Just wanted to understand how is the sourcing managed for Damas. I mean since 40% of Titan sourcing is coming through the GML facility. So just wanted to get an understanding from that market.

Question: Videesha Sheth - Ambit Capital Pvt Ltd - Analyst : So just wanted to understand, if I look at the finance cost or the finance charges as a percentage of sales, it was pretty steep versus the India operations. So just wanted to get a sense on can that reduce going forward?

Question: Videesha Sheth - Ambit Capital Pvt Ltd - Analyst : Got it. And just the last bit, the signature network that you're alluding to, what -- how much percentage of sales does that make up for Damas?

Question: Videesha Sheth - Ambit Capital Pvt Ltd - Analyst : Got it. That's helpful. Thanks. That's all from my side.

Question: Arnab Mitra - Goldman Sachs Group Inc - Analyst : Hi. I had a couple of questions. First was, as you're trying to grow Damas in these markets, what is the market structure here in the sense that the share gain will be organized and organized shift, or you would have to gain share from large, organized chains which are already there? Just wanted to understand the main source of growth? And also, what's the industry growth in these markets, if you could give us a broad sense of. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 10:00AM, TITN.NS - Titan Company Ltd on Acquisition of Damas Jewellery M&A Call

Question: Arnab Mitra - Goldman Sachs Group Inc - Analyst : And any broad sense of what share of the market is unorganized? Any broad range of number there?

Question: Arnab Mitra - Goldman Sachs Group Inc - Analyst : Sure. Thanks for that. And my one last question was given the higher stage share -- the obvious question is, is LGD a bigger factor in GCC than it is in India. So any insights on that? And is Solitaire a large part of the studded share. Those were the two related questions on the studded part.

Question: Arnab Mitra - Goldman Sachs Group Inc - Analyst : Okay. Thanks. That's all from my side. All the best.

Question: Gaurav Jogani - JM Financial Institutional Securities Pvt Ltd - Analyst : Thanks for the opportunity, sir. Sir, my question is relating to the 146 stores that you have announced. While we have seen in the annual report that they earlier had some 300-odd stores. So what is the difference between these 300-odd stores versus 146 stores on that that you are reporting, what all are not included?

Question: Gaurav Jogani - JM Financial Institutional Securities Pvt Ltd - Analyst : Surem sir. Thank you. That's very helpful. And sir, my second question, if you look at the reported numbers in terms of the EBITDA margin to the PAT margin conversion, while they make around 10%-odd kind of an EBITDA margin. However, the PAT margin is lower at 1%. So really, what is that goes in (inaudible) items like you can possibly help to bring it down and improve the profitability? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 10:00AM, TITN.NS - Titan Company Ltd on Acquisition of Damas Jewellery M&A Call

Question: Gaurav Jogani - JM Financial Institutional Securities Pvt Ltd - Analyst : Got it. That's very helpful. Thank you.

Question: Jaykumar Doshi - Kotak Securities Ltd - Analyst : Hi. Congratulations on this acquisition and thanks for the opportunity. Ashok, could you explain us a little unit economics as of today versus the one store of tonnage because even you did mention that 50-50 is the mix between studded and gold and gross margins are better. But if [pre-India] EBITDA margin is 3% despite no franchising, then what is the big cost item in their OpEx, which is very different from what it is for you in India? And is that more of a geographically -- geographic thing or specific to that geography? Or is it something that you will be able to sort of bring it to India levels?

Question: Jaykumar Doshi - Kotak Securities Ltd - Analyst : The signature part of the business, EBITDA, pre-India EBITDA margin is much higher than 3% is what?

Question: Jaykumar Doshi - Kotak Securities Ltd - Analyst : Understood. I know it's early days, but is there something which India business can benefit from Damas either designs or something which is different, which you think is -- you did talk about that there are a lot of things that you do well, which you will be able to sort of improve the operations of Damas, but any cross-learning opportunities for you?

Question: Jaykumar Doshi - Kotak Securities Ltd - Analyst : One last thing. Which are the brands that Damas competes with for the signature stores, right? Because I think there are two jewelry markets that exist in Dubai. One is basically catering to South Asians where making charge is lower than what it is in India. And the other one is where making charge doesn't matter. So the signature part of the business, which are the other brands which competing brands?

Question: Nihal Mahesh Jham - Hsbc International - Analyst : Yes. Thank you so much and congratulations for this acquisition. Sir, I have two questions. First one was on the competitive set itself. You did mention a couple of names. And just to get some clarity, would say, some of the international design-led brands also be a part of the consideration for the RF population that we are serving or there's a different market for that?

Question: Nihal Mahesh Jham - Hsbc International - Analyst : Got that. Final question, last year in the analyst meet, you had given a target of USD500 million for the international business. Does this acquisition be over and above that? Or it's a part of that target that you are looking at?

Question: Nihal Mahesh Jham - Hsbc International - Analyst : Wonderful. Thank you very much, sir.