Titan Company Ltd Q4 FY22 Earnings Conference Call Insights

Key highlights from Titan Company Ltd (TITAN) Q4 FY22 Earnings Concall

Q&A Highlights:

• Abneesh Roy from Edelweiss asked about Fastrack sales dipping 32% in FY22 and the way forward. Suparna Mitra CEO Watches said Fastrack store format is in the process of being reimagined and that’s why no stores were added. In FY23, TITAN has a plan of opening another 10-12 stores at various parts of the country.

• Abneesh Roy from Edelweiss also asked about Taneira business and how is the model shaping up and if TITAN is more confident now vs. start of year. Ambuj Narayan CEO Taneira said TITAN opened six stores last year and there is a good pipeline of stores coming up. TITAN is also very confident of Taneira and is expecting to do well in the coming year.

• Abneesh Roy from Edelweiss asked about the driver of Titan EyePlus sales declining 4% in 4Q. Saumen Bhaumik CEO Eyewear said Omicron was certainly a factor for the month of January and in March, while Titan EyePlus channel did sales more or less positive, TITAN also had to deal with store closure and overall for the division TITAN also had to do some channel correction. That’s why overall figure was muted.

• Vishal Gutka from PhillipCapital enquired about the contribution of gold exchange program for the quarter. Ajoy Chawla CEO Jewellery replied that it was good, which was 28% versus 27% in the previous year in terms of contribution.

• Amit Sachdeva of HSBC asked about the drivers of watches margin being weak. C.K Venkataraman MD said that watches have high share of manpower and headcount and that is why they have absorbed high proportion of ex gratia and VRS, which is reflecting in the slightly subdued margins.

• Amit Sachdeva of HSBC also enquired about the watches’ margin for 4Q and FY22. C.K Venkataraman MD replied that the watches EBIT margin for 4Q would be 6.7% and for FY22 would be 6.9%.

• Rakesh Jhunjhunwala from Rare Enterprises asked about the reason for losses in watches and eyewears. Ashok Sonthalia CFO said that excluding ex gratia and VRS, watches had INR42 crore of EBIT in 4Q and INR160 crore in FY22. For eyecare, EBIT was INR3 crore for 4Q and INR61 crore for FY22.

• Kunal Vora from BNP Paribas asked about lab made diamonds in the context of Indian market. C.K Venkataraman MD said subject of sustainability is at a greater level in the western countries, especially in the US. And the Gen Z and the millennial are looking at options and therefore the traction of lab grown diamond jewellery in the U.S. is quite strong. Also in the distant future, Gen Z of India will also start looking for these kinds of things.

• Jaykumar Doshi from Kotak queried about the ratio of net sales to UCP in FY22. Ashok Sonthalia CFO replied that standalone jewellery was 89-90%. So TITAN didn’t see any variation on that. It’s almost at the similar level what it was in the previous year.

• Jay Gandhi from HDFC Securities asked that in FY22 overall what’s the GOL, exchange and SPOT buying as a percentage of sourcing. Ajoy Chawla CEO Jewellery answered that GOL typically would be around the range of 50-60% in terms of Kgs and SPOT buying will be much, much smaller. The exchange, etc., would work out to about 40%.