Titan Company Ltd (NSE: TITAN) Q1 FY23 Earnings Concall dated Aug. 05, 2022
Call participants
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Ajoy Chawla — Chief Executive Officer – Jewellery
Ashok Kumar Sonthalia — Chief Financial Officer
Saumen Bhaumik — Chief Executive Officer of Eyewear
Ambuj Narayan — Chief Executive Officer – Taneira
Analysts:
Avi Mehta — Macquarie — Analyst
Abneesh Roy — Edelweiss — Analyst
Rakesh Jhunjhunwala — Rare Enterprises — Analyst
Percy Panthaki — IIFL — Analyst
Shirish Pardeshi — Centrum Broking — Analyst
Tejash Shah — Spark Capital — Analyst
Sheela Rathi — Morgan Stanley — Analyst
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
Latika Chopra — JPMorgan — Analyst
Hasmukh Vishariya — SUD Life — Analyst
Devanshu Bansal — Emkay Global — Analyst
Himanshu Mokashi — Yadnya Academy — Analyst
Gautam Rathi — CWC — Analyst
Siddhant Dand — Goodwill — Analyst
Prathmesh Agrawal — Varanium Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Titan Company Limited Q1 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. C K Venkataraman, Managing Director of Titan Company Limited. Thank you, and over to you, sir.
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Thank you very much. Thank you all for joining in. It’s been an exceptional quarter for the company. And I must thank all customers of the company, all employees, all partners and their employees and all the leaders and managers of Titan Company and its subsidiaries, CaratLane and TEAL, for meeting all the external challenges head on and delivering a very, very satisfying result on all fronts, including, of course, the financial performance that we are here to discuss. And I would like to straightaway jump into the Q&A. So please start with the first person in line.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Avi Mehta from Macquarie. Please go ahead.
Avi Mehta — Macquarie — Analyst
Hi sir. Congratulations on this performance. I had two questions. First was after the sharp custom duty increase, there has been a lot of talk about the consumption scenario as well as the competitive landscape changing. Do you see that as a risk in your ability to reach that 2.3, 2.4 times over FY ’18 to ’23 that you had earlier — that you were kind of guiding for?
Ajoy Chawla — Chief Executive Officer – Jewellery
Avi, Ajoy here. We are not seeing too much of a sharp impact of that. Gold prices have kind of remained in that INR5,000, INR5,100 range. And I think that is what matters to the customer. I don’t even see any significant change on the nature and structure of competitive framework. I think everybody is facing it. It’s okay. It’s not — I think the larger piece, if at all, that we need to think about going forward is over the next few months, how is the entry point customer who is possibly more inflation challenge, etc., that may be more important than this gold price increase because gold price increase has not been significant. It’s not been a big jump. It’s okay.
Avi Mehta — Macquarie — Analyst
So the custom duty is not the big deal. Okay. So the custom duty is not — and you said I didn’t understand how the entry customers. So is there any signs of concern that you’re witnessing? Is that what you’re highlighting?
Ajoy Chawla — Chief Executive Officer – Jewellery
Yes. So we have seen — the buyer growths have been very good, but we are seeing a greater traction on the higher ticket sizes and higher values and also greater traction on start. On the lower price points on gold, especially those who are looking at below 10 grams, below 15 grams every day where there is some creeping level of — there is still growth there. There’s no question. But yes, it is not as high as the rest of the segments are shown. But it’s very early days because we are not sure how that — because during Akshaya Tritiya, this customer came in, in good numbers, then it’s been a little muted. I think they’ll come whenever there is a festive season and there’s a reason to purchase.
That’s the understanding that we are getting. And therefore, hopefully, August month, where there’s a lot of mini festivals, we are expecting a lot of those customers to also come in. And again, during season, we’ll expect them to come. This is largely on the low price bank in gold. Otherwise, everywhere else — but it’s still a growth. I must just clarify, it’s still a growth. It’s not that there is a serious stress and all that.
Avi Mehta — Macquarie — Analyst
And what share would this be? Sorry, I’m just trying to understand this. Is this something that you think can build the growth in any reasonable manner?
Ajoy Chawla — Chief Executive Officer – Jewellery
No. It won’t build the growth.
Avi Mehta — Macquarie — Analyst
Okay, perfect. And the second question was across the segments. This quarter has been very healthy in terms of margins. Has there been any one-off in the margins that we should be aware of? And — or is this more a structurally better more margin profile that we should be witnessing because of the initiatives that you’ve taken post COVID?
Ajoy Chawla — Chief Executive Officer – Jewellery
So we, like across businesses, I would say that all the businesses have different operating leverages and watches and eye care has very high operating leverage and which is getting reflected with the growth. As far as jewelry is concerned, there is, I would not say one-off, but there is some gain, which came through two, three elements. One is the, of course, diamond prices. The other one is, of course, in this quarter, we had some spot gold purchase and forward contango, which is sitting in AGC, but through other income, it gets compensated to some of — and then of course, operating leverage in jewelry business also. The jewelry business would have a benefit of, I would say, 80 to 90 basis points because of that. Rest all businesses have performed well, grown well, and that is what getting reflected. Nothing one-off.
Avi Mehta — Macquarie — Analyst
If I may just try to understand this forward contango, we hedge so logically, there should be from other income, including there should be no margin benefit, right?
Ashok Kumar Sonthalia — Chief Financial Officer
So other income, I don’t know which level of margin you are looking at. Other income, including, yes, you are right. There are sometimes differences between contango and opportunity cost, but that’s very, very minimal. There should not be any difference, you are right.
Avi Mehta — Macquarie — Analyst
Okay. So it’s more leverage based and diamond price based, which is what you are still seeing.
Ashok Kumar Sonthalia — Chief Financial Officer
Yes.
Avi Mehta — Macquarie — Analyst
Ok sir, Thats all from myself. Congratulations and thank you very much sir.
Operator
Thank you. The next question is from the line of Abneesh Roy from Edelweiss. Please go ahead.
Abneesh Roy — Edelweiss — Analyst
Thanks. My question is on eye care. So very high margins. So are you seeing benefit of liquidity drying up for the start-up businesses which compete with you, not just for eye care business, across your other businesses also? And so good margins, is it sustainable for these kind of businesses?
Saumen Bhaumik — Chief Executive Officer of Eyewear
This is Saumen. As far as our margin structure is concerned, I think over the several quarters, we have kind of demonstrated that 64%, 65% gross contribution works, and it is — to us, it seems sustainable. Combination of house brand focus, channel mix, in-house production, India sourcing are the factors that give us that in our view. And as far as the PBT percentage is concerned and that I think in the ballpark of 15% plus is what we anticipate, it’s the sale swing of 10% kind of a significant swing of the 20% as we saw in some quarters between 15% to 20% and so. But 15% plus is what we believe is sustainable. And frankly, I have nothing really to say about what’s happening in the other side.
Abneesh Roy — Edelweiss — Analyst
Sure. On the jewelry margins, you have done very well. My question is what is driving this? Because you started has grown in line with your other segments. But if you could elaborate why wedding jewelry has grown a bit slower? Any concern that you see there? So here, again, is the advertising spend for the category now lower because of, in general, the advertising rates are lower or the industry has gone to a lower level? What — and so if you could elaborate on the margin front?
Ajoy Chawla — Chief Executive Officer – Jewellery
Yes. Abneesh, Ajoy, here. So the better margin delivery, first and foremost, is on account of operating leverage, what we are seeing in terms of the EBIT margin. Second, I would say, in terms of a richer product mix. And when I say product mix is not just started and gold, it’s — we look at all different categories. There are many categories that we look at. Even within studded, there are slightly differential margins for different product categories. And the third piece, I would say, which Ashok shared in the previous one was there is what you said about 80, 90 basis points, which is a one-off in the sense that it may not remain forever. It is there in this particular quarter. And so these are the three main reasons. On advertising, we have not cut down. In fact, our advertising to NSV is pretty much where it is. So in fact, we have been very, very prominent and very visible. So we are not holding back on advertising and neither is it that the rates have come down. It’s pretty much what it was.
Abneesh Roy — Edelweiss — Analyst
One last follow-up, and that’s the last question. So 23% CAGR in Jewelry is extremely good. And of course, this is one of the highest growth rate in any consumption segment. So I wanted to understand if you could comment on market share in three years in your view how it would have moved? And is it coming out because of any region-specific accesses or is it because of pan-India activation campaigns because you have been very aggressive on innovations also? So could you elaborate on these points on a three-year basis?
Ashok Kumar Sonthalia — Chief Financial Officer
Okay. On a three-year basis, I think our market share earlier, we used to quote 4% to 5% roughly. Right now, we are quoting at 6% to 7%. Also, the base has gone up. I remember it used to be — used to talk about INR300,000 crores, INR350,000 crores, around INR350,000 crores now the latest figures that I’m hearing is INR4 lakh crores to INR4.2 lakh crores. So certainly, I think market share gain in the market, which has also grown is one piece. Of course, part of the growth in the market has also been fueled by gold price gains that we should not ignore that. And in the recent past, also, even diamond prices have gone up. So there is a certain ticket size sitting there.
But even buyer growth has been good in terms of — we are seeing — if I were to look at the absolute value growth over ’19, ’20, quarter one is around 80%. And the volume that is buyer growth, the way we look at volume is buyer growth is sitting or bills growth, if you were to take it, is sitting at 26%. So it’s a fairly healthy growth in transaction value. Two things. I think the engines that were outlined earlier by Venkat in the previous forum that he has done the last five years, those engines, most of them are firing very well. During COVID period, there was a disruption in the golden harvest-related pieces. And therefore, to that extent, there has been a plus/minus. But again, enrollments have picked up very well. And going forward, we should, therefore, see a good progress on that.
The only addition that we have added in the last couple of years, one is we brought in a renewed focus on the lower ticket size, what we are calling as the core. So focusing on the lower price points and lower ticket size so that the funnel is strong because it is those people only over a period of time will migrate on to becoming the high-value customers. The second piece is digital. That has — last two years has built up as a solid engine. Even now, it’s contributing about 6% of our top line. And the third piece, which is helping us, which — it is a slightly modified form of an earlier engine, which is low — winning in low share markets. Now we are, in fact, taking up many more markets, and we are working across many different states.
So South, for example, we have seen very good traction. Parts of East, we have seen exceptionally good traction as well. So yes, in the three-year period, if I would say, South has really pulled up because of these strategic initiatives and also parts of East.
Abneesh Roy — Edelweiss — Analyst
Sure, thanks. Thats all from mine. Thank you.
Operator
Thank you. The next question is from the line of Rakesh Jhunjhunwala from Rare Enterprises. Please go ahead.
Rakesh Jhunjhunwala — Rare Enterprises — Analyst
Hello. My question is, how should we — how is Fastrack growing? You introduced handbag and all that.
Ashok Kumar Sonthalia — Chief Financial Officer
The women’s handbags?
Rakesh Jhunjhunwala — Rare Enterprises — Analyst
Yes.
Suparna Mitra — Watches and Wearables Division
Rakesh, Suparna here. Fastrack watches have grown quite well in the quarter with comparison to the previous quarter one of last year, we have grown by 120%. And the big thrust has been in the lower price economy, entry-price products. In fact, we did a big campaign with channels, which is the entry price products. Fastrack smartwatches continue to do very well. We have a big winner in Fastrack Walk as well as we had two new Fastrack smartwatches in this quarter, in quarter one. So it’s been a very good run for Fastrack smartwatches. We’ve really picked up a lot of traction.
Ashok Kumar Sonthalia — Chief Financial Officer
And Rakesh, we are also very excited about the Fastrack brand in the eye care category. Saumen, would you like to.
Saumen Bhaumik — Chief Executive Officer of Eyewear
Yes. Rakesh, we have just opened our second Fastrack prescription eye wear store, okay, specifically to address the youth segment. I think I mentioned it last time around. And very soon, we are going to have five, six in the city and 25 stores across the country. So this is purely for youth segment prescription eye wear, like Titan Eye+ for the rest.
Manish Gupta — Chief Executive Officer & Vice President of Fragrances and Accessories
Rakesh, Manish here. So I think Fastrack girls’ bag are receiving a very good response. The longest spring-summer drop one drop two. And while growth have no logic here because 2.5, three times of the earlier years, but I think we are expanding into the Lifestyle and Shoppers Stop. Currently, we’re running at above 60 stores plus and we’re getting very good response from the customers there, and we’re getting very solid growth rates and momentum there. So we are hoping this to continue.
Rakesh Jhunjhunwala — Rare Enterprises — Analyst
Thank you. God bless.
Ashok Kumar Sonthalia — Chief Financial Officer
Thank you Rakesh. I will speak to you later.
Operator
Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.
Percy Panthaki — IIFL — Analyst
Hi congrats on a good set of numbers. My question is, given the kind of traction we are seeing on the margins in jewelry, I mean, typically, Q1 is one of the lowest margin quarters in the year, but we’re still sort of crossed 13%. We had 13.5 times bullion. So do you think in light of this, our guidance of this 12% to 13% EBITDA for the full year is on the conservative side now?
Ashok Kumar Sonthalia — Chief Financial Officer
No, I think we are okay with our guidance quarter-on-quarter. And as I explained you in my earlier answer that there is a onetime sitting here. So I think our guidance remains 12% to 13% EBIT margin for jewelry business.
Percy Panthaki — IIFL — Analyst
So would you be able to quantify the onetime?
Ashok Kumar Sonthalia — Chief Financial Officer
I said 80 to 90 basis points. And then of course, some operating leverage also sitting there.
Percy Panthaki — IIFL — Analyst
Understood. Secondly, in terms of the wonderful response you’re getting from the market, demand seems to be very sort of strong. Would you want to sort of front end your store expansion in light of that?
Ashok Kumar Sonthalia — Chief Financial Officer
Yes. This is for jewelry or across?
Percy Panthaki — IIFL — Analyst
Jewelry.
Ashok Kumar Sonthalia — Chief Financial Officer
Across the board, Percy, everyone is pursuing a very, very aggressive because Titan has never let any relax on that front because this is from a medium-term opportunity point of view. So we are pushing all the potence in Taneira, in eye care, in watches, in jewelry in every business, CaratLane, all brands, Zoya. So everywhere, we are pushing the buttons on expansion.
Ajoy Chawla — Chief Executive Officer – Jewellery
So Percy, I don’t know whether you saw the report, but 125 net addition in quarter one, I would imagine I have not yet checked, but this could be one of the highest numbers in our history.
Percy Panthaki — IIFL — Analyst
Sure. Yes, understood.
Ashok Kumar Sonthalia — Chief Financial Officer
If you’re referring to Tanishq, Delta six may look small or Delta five on CaratLane may look small. But actually, there are many very aggressive plans. It’s just that some spillover, etc., is there. So in quarter two, you will see, hopefully, more than double in both. So overall aggression is very high.
Percy Panthaki — IIFL — Analyst
So what are you targeting for the full year in terms of Tanishq number of store expansion?
Ashok Kumar Sonthalia — Chief Financial Officer
So we have a long list of 50, but we think maybe about 35% to 40% is what might materialize. Though if we get the right properties right places, we might even go up to 50, if we were able to execute. And CaratLane also has got a likewise a very aggressive number even bigger than that.
Percy Panthaki — IIFL — Analyst
Sure. So on CaratLane, you’ve done a 6.9% EBIT margin, that’s quite creditable for the scale of the business, and we are still growing at a very, very fast pace. And I’m sure operating leverage would keep on kicking in for this business. So should we sort of be a few years down the line, taking a double-digit EBIT margin in CaratLane as well just as we do for Tanishq?
Ashok Kumar Sonthalia — Chief Financial Officer
Over a long-term period, of course, they have potential to reach to double-digit EBIT margin because they have been working and they have improved their contribution, gross contribution, etc., etc. But they are, at the same time, investing also a lot on talent and digital and stores and everything marketing, etc. Digital marketing, as you might be aware, is becoming expensive. So — but over a long term, you are right, if I keep a horizon of five years, they definitely have three- to five-year double-digit EBIT target.
Percy Panthaki — IIFL — Analyst
And is there any plan or schedule to increase the stake here in CaratLane?
Ashok Kumar Sonthalia — Chief Financial Officer
Right now, there is nothing. But as soon as we do something, we’ll discuss something, we’ll let you know.
Percy Panthaki — IIFL — Analyst
Okay, that is all for me. Thanks and all the best.
Operator
Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Shirish Pardeshi — Centrum Broking — Analyst
Hi, good evening. Venkat, thanks for very impressive performance. I have three questions, starting from jewelry. When I look at the capital implied in the jewelry segment has gone up and even the unallocated corporate expenses also looks a little higher to me. So is there any explanation which is available?
Ajoy Chawla — Chief Executive Officer – Jewellery
Ajoy here. The capital employed in jewelry, well, we have taken higher inventory kind of a position right through the last quarter as well and this quarter one as well. And we will probably continue to take a more aggressive bet on inventory, betting for growth because as we are going deeper into India, into many small towns and many different communities and also pursuing the wedding agenda as well as pursuing the high-value studded agenda, etc., the stock turns on some of these will be a little lesser. They won’t be like the regular product. So we are, therefore, betting on inventory as one method. Also, of course, you must recognize that the value of inventory has gone up because the price of gold has been pretty high and now diamond.
So in terms of value, it might have an even greater impact. Therefore, what you are seeing is there. Our gold on lease as a percentage of the total has been slightly below what we would have wanted. And therefore, on the capital employed, it may look like, therefore, there is a certain greater delta, but that’s a matter of quarter-on-quarter something will keep happening, and it might change.
Shirish Pardeshi — Centrum Broking — Analyst
Ajoy, that was helpful. But the question is that, as Percy has pointed, quarter one is a little lower for us. And in the inventory section, if it is going up, that means throughout ’23, the inventory will be at elevated level because we also have the very strong growth in terms of opening up new stores.
Ajoy Chawla — Chief Executive Officer – Jewellery
So our stock turns are certainly quite good. And they are — we look at a trailing 12-month stock turns, they are actually better. So even if it does go up, it’s not such a big issue. As long as the total growth is coming in, and that’s the strategy that we’re adopting. Also, the risk on the inventory is that much lower because we can always melt. In fact, we did a little bit of that in quarter one. And we, in fact, translated that to a different mix within a month. It may remain a little elevated, but the stock turn as overall is what’s important and that we are managing.
Shirish Pardeshi — Centrum Broking — Analyst
If I may ask, is it because of the exchange has gone up significantly?
Ajoy Chawla — Chief Executive Officer – Jewellery
No, not really. That’s not — in fact, if it does go up, yes, you’re right, there is an impact on inventory. And we have — on exchange, we have — it’s a growth driver for us. So we’ve seen a certain jump there. But that’s easily managed by — in terms of melting and selling gold back onto the MCX. So that’s not a concern. That won’t be impacted.
Shirish Pardeshi — Centrum Broking — Analyst
Just one follow-up. On slide 21 on the jewelry section, you mentioned that new buyers contribution continuing to be quite robust at 46%.
Ajoy Chawla — Chief Executive Officer – Jewellery
26%.
Shirish Pardeshi — Centrum Broking — Analyst
So would you be — 46%. So I just wanted to have the understanding. Is that 46% contribution in jewelry segment has come because of new buyers?
Ajoy Chawla — Chief Executive Officer – Jewellery
Yes. Okay. Sorry. I was confusing earlier figure I quoted was on growth and this is on share contribution. So 46% is good. Historically, we’ve been at the 44%, 45% level. And in quarter one, 46% is amongst the higher numbers compared to previous three, four years’ quarter one numbers. So we are — and yes, new buyer growth has been robust, and we are very happy about that because that indicates we are also, in a way, gaining share.
Shirish Pardeshi — Centrum Broking — Analyst
But would you be able to quantify in terms of number of million footfall, something like that?
Ajoy Chawla — Chief Executive Officer – Jewellery
No, we would not.
Ashok Kumar Sonthalia — Chief Financial Officer
We would be able to quantify, but normally, we don’t like to share such information.
Shirish Pardeshi — Centrum Broking — Analyst
All right. My next question is for Suparna. It’s heartening to know that the performance is really astonished. But then in INR785 crores the top line number what we have reported, what would be the variable contribution? And a related question on that, we have seen a significant margin expansion. Is it happened because of the measures what you have elaborated during our analyst meet or something else has come or is there any one-off? And if you can comment upon if this kind of margin is sustainable?
Suparna Mitra — Watches and Wearables Division
Yes. So the variables portion is still below 7%, and it is slowly inching every quarter, the percentage is only going up. As far as the margin is concerned, I think the operating leverage having kicked in, that’s where it is really contributing. I think there is also a combination of product, brand mix as well as channel mix that has helped in this. And some of those are long-term trends. So brand — the brand Titan, which is powering the growth is the more high-margin brand, and that is giving us the increase in margin. Is it sustainable? Yes. I think the 13% rate is sustainable.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. Just one follow-up on slide 17 — slide 47, you have mentioned the volume growth for watches has grown 108%. In a recovery stage, I think most of the things are normalizing. So how much volume growth one can build? And maybe if you can give some more color what is driving this number?
Suparna Mitra — Watches and Wearables Division
I think this is really because of the base effect of quarter one of ’22. So otherwise, on a normal basis, this would be not sustainable, 100% of it’s really value growth that is taking us. And I think the other way to look at it is, for example, on the 165%, 170% growth that we’ve seen in the NSP this quarter over last year is actually translating to about 22% growth over ’19, ’20, and that is also a very healthy double-digit growth, which is what we are anyway aiming for targeting year end.
Shirish Pardeshi — Centrum Broking — Analyst
Okay. That’s really helpful. My last question for Saumen, on the eye wear business, I think it is heartening to know that you have delivered a very strong performance. But in the context of channel conflicts and other things which are behind, can we estimate the margin trajectory, what you have mentioned is sustainable from here onwards?
Saumen Bhaumik — Chief Executive Officer of Eyewear
Our predominant channel, almost 75-plus percentage is Titan Eye+, the retail channel. Then we have the distribution channel, which is ranging between 15% to 20% and they resorted a few others and including our own other retail channels. So that, I think, would not significantly alter even though the distribution component might increase a bit, but so would retail. So our estimate is that going forward, anything over 15% is what would remain as our sustainable margin projection for future.
Shirish Pardeshi — Centrum Broking — Analyst
Wonderful. Thank you Saumen. Thank you Venkat, congratulations once again and all the best for the future endeavor.
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Thank you, Shirish.
Operator
Thank you. The next question is from the line of Tejash Shah from Spark Capital. Please go ahead.
Tejash Shah — Spark Capital — Analyst
Hi, thanks for the opportunity. Congrats on good set of numbers. First, a couple of questions on jewelry division and this is — may sound slightly basic. But bullion sales, how should we see? Is it a tactical tool, which we use occasionally or is it some sort of growth engine, not material in, but it helps us to deliver growth whenever required types?
Ashok Kumar Sonthalia — Chief Financial Officer
It is more tactical and tactical some time to manage inventory levels, sometimes there are markets in gold, which creates opportunity where you can gain between its spot, GOL,etc,etc. So it is much more tactical. I don’t think that — It’s not — and that is why we always keep it out in all our communication to you guys, we always call it out. We never add it to our revenue because this is not something which we are looking at adding value to the business, just management of working capital and some of the other opportunities. That’s it.
Tejash Shah — Spark Capital — Analyst
Sure. So does more of a financial decision than business decision?
Ashok Kumar Sonthalia — Chief Financial Officer
Inventory is, of course, business decision because they recall sometimes if it’s something, some thing happens. And then at that point of time, it is financial decision, whether to sell it back or what to do with that.
Tejash Shah — Spark Capital — Analyst
Sure, that’s helpful. Second, on South India as a potential growth driver in terms of even in our presentation and even on our annual report, we spoke about that at length. Just wanted to understand, in terms of margins, in the past, we have seen that, that market has not been very margin accretive. Has anything changed in terms of the consumer behavior there? And even the approach to studded share, has it changed in the recent past in terms of being more margin accretive than it was, let’s say, 10 years back?
Ajoy Chawla — Chief Executive Officer – Jewellery
Yes. So Ajoy here. You’re right. The South markets have traditionally been more price sensitive and, therefore, margin — relatively lower margin, especially on gold as well as on the mix started being a lower proportion. That continues to be the case. There have been improvements in all the regions that we are driving in terms of margin delivery, both through product mix as well as through AMCs and gold rates, etc., etc. So that effort continues everywhere. But there has not been any significant shift. Yes, we are pushing a little bit more on studded product mix, particularly in markets like Tamil Nadu and Andhra Pradesh. Bangalore has always been good, but the rest of Karnataka is much more of gold. But yes, we are pushing a little bit through by virtue of our specific market interventions to help improve the mix. But other than that, it is not dramatic. It continues to lag behind the rest of the country.
Tejash Shah — Spark Capital — Analyst
Thanks. And the last one, in our analyst meet also, we spoke about our ambition to drive more technology products in our wearable division and even in our annual report, we spoke about it. And I believe that Hyderabad development center will actually further strengthen our capabilities on that side. So just wanted to understand what will be our range of products that we are targeting? Are we trying to get into in a big way, headphones and other space also of consumer electronics? And any immediate plan of launching some of those products?
Suparna Mitra — Watches and Wearables Division
So for us right now, the focus is on smartwatches. We’ve already launched three this year. And there are four more lined up for launch later in August. We do have — and these are doing very well, and we have launches from INR3,000 to already up to INR10,000. And that’s really the white space that sweet spot where our wearable smartwatches are coming in. I had mentioned this even in the investor meet. In terms of other categories, hearable, which is audio accessories, we do have a couple of options right now. It’s a very highly growth category, really exploding. A lot of the action is at below INR2,000, INR2,500, and we are, again, looking at a similar white space between around INR2,000 to INR5,000. Currently, we have a couple of launches lined up for quarter three.
But the work that is going on in this space is really how are our products differentiated. And yes, the Hyderabad development center is going — they are — there’s a lot of work going on in terms of making that technology really translates to consumer benefit. So there are consumer benefits like active noise cancellation or ANC. But a lot of people don’t understand. And finally, the usage of hearables is, like I said, exploded, but there are still a lot of consumer pain points and our attempt will be that in the second half of this year, we come out with products which are really consumer insight led and attempting to solve some of these consumer pain points.
Tejash Shah — Spark Capital — Analyst
Great. And just last one, if I may. How will the margins track in wearables versus watches?
Suparna Mitra — Watches and Wearables Division
The margins are lower wearables is for us. For watches, we are beating the market leaders for more than three decades and our entire value chain, the supply chain, the entire end-to-end process allows us the leadership position so we can command the premium in wearables, the category itself is a lower margin category. And right now, we have planned for growth and really making our presence felt and our products accepted by consumers. So at this point, there is a difference, and it will be there. It will continue.
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Also, while the product margin is one aspect of it, given the nature of the exclusive growth potential sitting in that, the scale leverage can help in actually delivering an attractive business margin down the road earlier than in some other categories, where the product margin could be higher.
Tejash Shah — Spark Capital — Analyst
Got it. Thanks and all the best of everything.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Sheela Rathi — Morgan Stanley — Analyst
Yeah, thank you very much for taking my question. I had a couple of questions. The first question was very strong growth on the jewelry business, over 200%. Maybe excite the Akshay Tritiya revenue for this particular quarter because the base may not have that strong trend. So then how does the growth look like on the jewelry business?
Ajoy Chawla — Chief Executive Officer – Jewellery
It continues to look very good. Akshay Tritiya month, of course, gave us a good bumper kicker. But even if I look post-Akshay Tritiya, I think the numbers are pretty much comparable. So — but that’s because the growth of 200-and-some percent is on a disrupted quarter of last year. So in a way, we cannot take this 200% beyond what it is. On FY ’20 is where we have seen 80% growth, which is the value growth that we are looking at. And there, I think, Akshay Tritiya or otherwise, the growth figures are pretty comparable. Going forward, we don’t know whether those growth figures can sustain. We’ll obviously have different levels. You can’t take that as a baseline.
Sheela Rathi — Morgan Stanley — Analyst
Absolutely. And Ajoy, if you could call out in terms of what are the trends we are seeing in the second quarter month-on-month trends and if you have any activations which are in place going into the festive season?
Ajoy Chawla — Chief Executive Officer – Jewellery
You’re referring to quarter one itself, right?
Sheela Rathi — Morgan Stanley — Analyst
Second quarter, July month.
Ajoy Chawla — Chief Executive Officer – Jewellery
No, I think we are not commenting on July and this thing. However, like every year, we have our studded activation in quarter two that has commenced in the middle of July. I’m sorry, I won’t be able to share any update on the numbers there because of the new guidelines, we are no longer sharing the current month updates. But yes, like previous years, we have the studded activation, which is a big one. And we will continue to prepare well for the forthcoming season and we will do some collection launches, etc., which is typical of what we do.
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Sheela, just to add, I think we are pretty satisfied with the July month performance so far. Of course, we will not quantify what it takes.
Sheela Rathi — Morgan Stanley — Analyst
Understood. Thank you very much.
Operator
Thank you. The next question is from the line of Kunal Vora from Baroda BNP Paribas Mutual Fund. Please go ahead.
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
Hi, thanks for the opportunity. First question is on diamond prices. Now how high are they compared to last year? And should we expect any more benefit from this?
Ajoy Chawla — Chief Executive Officer – Jewellery
So diamond prices, we’ve had a series of price increases in line with as we were procuring the diamonds. It’s been a fairly volatile market, and there has been significant upside actually on that volatility rather than downside. So we took price increase in November. We took price increase in Jan. We — I mean this is not — we are taking it bits and pieces, and then we took something in March because that’s how the market has behaved. And it continues to be quite a ride so far. I don’t think prices are coming down in a hurry. There was some minor correction here and there, but it’s back — it’s supply led actually. And we don’t know.
We might have to take some more price increases maybe by the end of the quarter, if things continue to be like this. So it’s a dynamic situation. And therefore, I think we will probably continue to have some gains even in the next quarter, besides this quarter. I have a feeling it will spill over into quarter three also. But exactly, we can’t say because it’s an act that comes out at the end of the quarter.
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
Sure. Thanks for that. Second is the status of hallmarking in India now. And have you seen any market share gain, any structural changes because of this?
Ajoy Chawla — Chief Executive Officer – Jewellery
No, not very evident so far. I think what is happening is that the market is getting used to it. There is a certain cost of doing it and there is a certain impact that maybe smaller jewelers might be facing because of the fact that now purity has to be kind of guaranteed. But really speaking, we are not seeing any structural impacts right now. It’s too early to comment.
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
Sure. And just one last question. On jewelry, how are you looking at the remaining three quarters of the year? I mean, like last year, you might have had some benefit of pent-up demand in second quarter. So would you still say that 15%, 20% kind of a growth on a year-on-year basis, that’s something which you would bend for or even higher than that is possible?
Ajoy Chawla — Chief Executive Officer – Jewellery
So we’ve — even in our previous five-year horizon and even the recent one in the investor thing, we had mentioned about a 20% CAGR is something that we are certainly wanting to push aggressively for and pent-up demand or no doesn’t matter. The headroom for growth is huge for us. And certainly, there are some tailwinds on formalization. So our outlook on jewelry growth continues to remain very bullish, and we will pursue this quite ambitiously and aggressively.
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
So you don’t see the high base from last year as an issue. I mean do you think that even on that base, a 20% kind of plus kind of a number which you’re looking at is still doable?
Ajoy Chawla — Chief Executive Officer – Jewellery
It’s an opportunity. I would look at it as now we have so many more stores, so many more stores firing so well, all engines working well, why not go for the accelerator.
Kunal Vora — Baroda BNP Paribas Mutual Fund — Analyst
Thats it from me. Thank you very much.
Operator
Thank you. [Operator Instructions] The next question is from the line of Latika Chopra from JPMorgan. Please go ahead.
Latika Chopra — JPMorgan — Analyst
Hello everyone. Thank you for the opportunity. I had one question on the jewelry’s making charges. I wanted to check how often do you benchmark the making charges versus competition? I believe you will defer in each market. And what kind of premium are you very comfortable keeping on making charges versus peers, considering the new buyer growth has been fairly robust for you? But going forward, do you see any need to operate with the products with marketing charges as you ventured into more markets? Any color on this?
Ajoy Chawla — Chief Executive Officer – Jewellery
Yes. Thanks, Latika. Good question, actually. We do keep benchmarking at least twice a year, sometimes thrice a year if so warranted. And you are right, making charges vary significantly by product type as well as by markets and regions. So it’s a fairly complex exercise. And therefore, we are not able to do it more than twice a year effectively. Having said that, we are — you’re spot on, as we grow into smaller towns, and we are present in 237 towns, so 150 plus or 160-plus of them are really below 10 lakh, and quite a few below five lakh population towns. So we are keeping a watchful eye on making charges. And you’re right, if you were to ask me, I think we need to do a lot more in the more affordable making charge segments, because that’s what will really help us to keep the top of the funnel in terms of new buyers coming in at a healthy level, and those can over a period of time, migrate into our system.
So it’s spot on, and we need to do a lot more work there. Having said that, in terms of premiums, yes, we will be at a premium to the markets, whichever the price band and whichever the product category. Because clearly, we are investing a lot more in quality and finish and also responsible sourcing. So all of those things, customers are — and of course, there is design. So all of these put together, the customer is certainly willing to pay a premium. But yes, will she be willing to pay a huge premium on that? It has to be justifiable in her mind. So I can’t quantify the premiums — that because it’s a very complex subject. But yes, we will operate at a premium to the market, but at an acceptable premium.
Latika Chopra — JPMorgan — Analyst
Sure. No, that’s very helpful. And the second part that I wanted to understand is we’ve seen the diamond prices going up after a long time. I was just wanting to check, what could be the contribution of pricing growth for diamond, in diamond segment revenue growth? And have you seen any pullback in the consumer because the increase in diamond price is very substantial?
Ajoy Chawla — Chief Executive Officer – Jewellery
No. In terms of buyer growth at an overall level in studded, we are not seeing any impact. Yes, there is a need to ensure that we don’t vacate price points, and therefore, we need to keep working hard to ensure, even in the below INR50,000 category, we have adequate price points of products. So that’s a dynamic situation. In terms of diamond price contribution, I don’t have a number, but over quarter one of FY ’20, if I were to go back and say, surely, there would be a 15%, 20% impact purely on account of price increase in diamonds. I don’t have an exact figure, this is a rough estimate.
Latika Chopra — JPMorgan — Analyst
This is helpful. Thank you so much Ajoy.
Ajoy Chawla — Chief Executive Officer – Jewellery
Thank you.
Operator
Thank you. The next question is from the line of Hasmukh from SUD Life. Please go ahead.
Hasmukh Vishariya — SUD Life — Analyst
Yeah, hi. Congrats on a strong set of numbers. My question is for jewelry business. So if I do some calculation on volume per store basis, so I’m getting almost like a flat sort of a number on a CAGR basis over 10 years period prior to COVID. So is my understanding correct that during that period, we haven’t seen any sort of volume growth per store and SSG growth would have come only from the gold price change?
Ajoy Chawla — Chief Executive Officer – Jewellery
10-year — so I’ll tell you what, I think most of the expansions over a 10-year period have happened. In fact, I’ll give you a statistic. In the last five years, we’ve added more than 100 towns, okay? And all these towns are likely — are in the sub 10 lakh population, and some of them in sub-five lakh population terms. And also when you are adding so many stores. In 10 years, we would have added, I don’t know — yeah, 200 stores. So 200 stores and maybe 150 towns, okay? And now you must recognize that these towns and these newer stores will not give you the same level of volume like the bigger ones. So from a same-store buyer growth perspective, you’re right. We have that as a metric, and we keep an active track on that, not just on value, but also on buyer growth.
And we actually aggressively target same-store buyer growth at a store-to-store level in every city. But maybe when you do the averaging out over a 10-year period, I don’t know what numbers it throws up, maybe we can connect offline and understand better. Not able to comment on the specific outcomes you have seen in your analysis.
Hasmukh Vishariya — SUD Life — Analyst
Understood. Thanks for that. That’s it from me.
Operator
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal — Emkay Global — Analyst
Yes sir, thanks for the opportunity. Congrats on a great set of numbers. I just wanted to check on the recent custom duty increase. Do you also anticipate some inventory gains, as we were having a high level of inventory at FY ’22 end?
Ashok Kumar Sonthalia — Chief Financial Officer
So Devanshu, while some sort of gain would flow in, in quarter two, quarter three, to my mind, but market has been reacting in different ways on different pricing, competitive actions, and we will continue to respond to that. But there will be certainly some amount of gain, which will come in quarter two and quarter three.
Devanshu Bansal — Emkay Global — Analyst
Sure, sir. And can you quantify as in some…
Ashok Kumar Sonthalia — Chief Financial Officer
Very difficult to quantify because there is — we are still seeing after increase, how the pricing actions are happening in the market, and we are reacting to that. Very difficult to quantify. It’s not going to be very material game changer in terms of margin of jewelry business. It will be there but not something very significant.
Ajoy Chawla — Chief Executive Officer – Jewellery
So Devanshu, I’ll add on to what Ashok said. Essentially, we are not seeing every player kind of price their gold accordingly all the time. And it is different in different markets. So from a pure competitive angle, we also are willing to play that game, if required, to ensure that we don’t sacrifice on volume growth or customer dividend. And therefore, the ability to quantify it may be very, very difficult. It’s an outcome that we’ll have to see. Month-to-month, we will track, and then have a look at it. Maybe by the end of quarter two, we might have a better indication how it will be — it’s difficult to predict the number.
Devanshu Bansal — Emkay Global — Analyst
Sure sir that is helpful. Thank you. The next question is from the line of Himanshu Mokashi from Yadnya Academy. Please go ahead.
Himanshu Mokashi — Yadnya Academy — Analyst
Yes, hello sir. My question is around international business. Just wanted to understand how much of the sales has been coming from Dubai and U.S. till date?
Ashok Kumar Sonthalia — Chief Financial Officer
How much, sir?
Himanshu Mokashi — Yadnya Academy — Analyst
How much of the business is coming from Dubai and U.S.A.?
Ashok Kumar Sonthalia — Chief Financial Officer
We don’t have any presence in the U.S. yet Himanshu. We don’t have a presence in the U.S. yet. We have very aggressive plans for the GCC. We already have, if I recollect — three stores and the fourth store is opening anytime now, and we are ratcheting up the expansion plan in GCC, as well as planning more aggressively for the U.S. At the moment, the share of the international business is low. But in the next two to three years, we see it galloping.
Himanshu Mokashi — Yadnya Academy — Analyst
Okay. And I just wanted to get a sense on the breakeven period of how can we count this. So what has been the — what would be the breakeven period for a Tanishq store in India versus in Dubai or may in the U.S.A.? If you can explain further on that?
Ashok Kumar Sonthalia — Chief Financial Officer
Actually, at a store level, because the scale economies are better than outside. So at a store level, the breakeven will be as good. But at the business level, we are looking at maybe third full year, fourth full year breakeven at a business level.
Himanshu Mokashi — Yadnya Academy — Analyst
Okay. But any exact number, sir? Then in India, how much India versus outside?
Ashok Kumar Sonthalia — Chief Financial Officer
No. We have declared a dream of INR2,500 crores in the analyst conference for the international Tanishq business.
Himanshu Mokashi — Yadnya Academy — Analyst
Okay. And any guidance sir, on how many stores we are expecting to open in the U.S.A. in FY ’23?
Ashok Kumar Sonthalia — Chief Financial Officer
In FY ’23, maybe two to three.
Himanshu Mokashi — Yadnya Academy — Analyst
Two to three. And we are on — we are committed to — I’m sorry, I’m so sorry…
Ashok Kumar Sonthalia — Chief Financial Officer
Mostly two stores in FY ’23.
Himanshu Mokashi — Yadnya Academy — Analyst
Okay. And we are committed to opening roughly 20 stores as discussed in I think Q3 con calls, in Dubai?
Ashok Kumar Sonthalia — Chief Financial Officer
No. In international. GCC.
Himanshu Mokashi — Yadnya Academy — Analyst
International. GCC.
Ashok Kumar Sonthalia — Chief Financial Officer
Yes.
Himanshu Mokashi — Yadnya Academy — Analyst
That is all from my side sir. Thank you so much.
Ashok Kumar Sonthalia — Chief Financial Officer
Thank you.
Operator
Thank you. The next question is from the line of Gautam Rathi from CWC. Please go ahead.
Gautam Rathi — CWC — Analyst
Yes, will it be possible for you to quantify the international business revenue in absolute terms?
Ashok Kumar Sonthalia — Chief Financial Officer
For the period?
Gautam Rathi — CWC — Analyst
For the quarter, yes.
Ashok Kumar Sonthalia — Chief Financial Officer
Could be about INR50 crores to my mind. INR40 crores to INR50 crores. INR50 crores, yes.
Gautam Rathi — CWC — Analyst
And the other business which has grown to INR60 crores, this revenue, it’s primarily driven by Taneira, right?
Ashok Kumar Sonthalia — Chief Financial Officer
No, I think fragrances also did very well. Taneira, of course has done well in terms of revenue. So it is fragrances also, which have done well.
Gautam Rathi — CWC — Analyst
So can you just quantify Taneira’s revenue? Approximately, what would be the quarter’s revenue for Taneira?
Ashok Kumar Sonthalia — Chief Financial Officer
I think you see Taneira is in a very, very rapid ramp-up phase. I think we will start disclosing separately, then when they have — level, makes sense to. At this point of time in our overall structure, they are still not yet to become meaningful to be disclosed. But they are ramping up well. You would have seen they have opened six new stores in this quarter and next quarter, again, they may have a…
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
And we had declared INR1,000 crores ambition for Taneira. We will start disclosing the numbers at an appropriate time. At this point of time, we are putting just as another segment, okay?
Gautam Rathi — CWC — Analyst
No, I can understand. And then the 26 stores that you have in Taneira, they’re all in company-owned models, or are you also starting to franchise the same?
Ambuj Narayan — Chief Executive Officer – Taneira
Hi, this is Ambuj. So now about more than 50% of the stores are franchisee stores.
Gautam Rathi — CWC — Analyst
More than 50% of the stores are franchise stores? And there, the revenue is booked when you ship to the franchisee, right?
Ambuj Narayan — Chief Executive Officer – Taneira
No…
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
This is a consignment — management agent franchisees at the moment, Gautam. But sometime in the near future, we are also moving to a buy and sell model, like it is there in the other businesses. And at that time, depending on the particular store, it will be either immediate or later.
Gautam Rathi — CWC — Analyst
Sure. Thanks a lot.
Ashok Kumar Sonthalia — Chief Financial Officer
I think we take a last question.
Siddhant Dand — Goodwill — Analyst
All right sir. Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.
Ashok Kumar Sonthalia — Chief Financial Officer
Thank you Sidhant, how are you doing?
Operator
I am sorry. I muted him. Give me a moment sir. I unmuted him. Also sir we have another question on the queue. Would you like to take that.
Ashok Kumar Sonthalia — Chief Financial Officer
Sure.
Operator
Thank you. The next question is from the line of Prathmesh Agrawal from Varanium Capital. Please go ahead.
Prathmesh Agrawal — Varanium Capital — Analyst
Congratulations on a very good set sir. Just wanted to — could you give us a color on any of the flow-through from fourth quarter to first quarter, in terms of top line?
Ashok Kumar Sonthalia — Chief Financial Officer
I didn’t follow? Can you clarify?
Prathmesh Agrawal — Varanium Capital — Analyst
So the first quarter had some revenue, which got slipped from the fourth quarter. So January, February was kind of a COVID impacted month. So will we see like the first quarter, had some impact from that fourth quarter?
Ashok Kumar Sonthalia — Chief Financial Officer
No, we don’t think so. But it’s an interesting question. I think a little bit of the wedding purchases may have got split between the two quarters. We don’t know exactly, we can’t quantify it. But other than that, no, because in quarter four of last year, it was a studded activation period, quarter one, we didn’t have. The drivers of growth have been slightly different in both the quarters. But maybe on weddings a little bit here and there could have happened. But it’s not significant and frankly speaking, we won’t be able to quantify also.
Prathmesh Agrawal — Varanium Capital — Analyst
Okay, sir. That is helpful. Thanks a lot.
Operator
As there no further questions from the participants. I now hand the conference over to Mr. C K Venkataraman for closing comments.
Coimbatore Krishnamurthy Venkataraman — Managing Director & Additional Director
Thank you very much everyone whoever is still connected. See you next quarter. [Operator Closing Remarks]
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