Titan Company Ltd (NSE: TITAN) Q2 2025 Earnings Call dated Nov. 05, 2024
Corporate Participants:
C K Venkataraman — Managing Director
Ajoy Chawla — Chief Executive Officer, Jewellery
Ashok Sonthalia — Chief Financial Officer
Saumen Bhaumik — Chief Executive Officer, Eyecare Division
Suparna Mitra — Chief Executive Officer, Watches and Wearables
Analysts:
Devanshu Bansal — Analyst
Tejas Shah — Analyst
Avi Mehta — Analyst
Jai Doshi — Analyst
Percy Panthaki — Analyst
Nihal Mahesh Jham — Analyst
Shirish Pardeshi — Analyst
Krish Shanbahar — Analyst
Saurav Mondal — Analyst
Aditya Soman — Analyst
Siddhant Dand — Analyst
Rahul — Analyst
Ashish Kanodia — Analyst
SM — Analyst
Saurabh Patwa — Analyst
Sheela Rathi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q2 FY ’25 Earnings Conference Call of Titan Company Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. C K Venkataraman, Managing Director from Titan Company Limited. Thank you, and over to you, sir.
C K Venkataraman — Managing Director
Thank you very much. Good evening, everyone, on the call. It’s good to join you immediately after a wonderful Diwali. Happy Diwali belated to all of you. And we’re also happy to do this call on top of a good growth quarter in Q2. I would like to circle back at the end of the call to give my broader comments on the company and the various parts.
Now I can hand over to the people who would like to ask us questions, please.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Yes, sir. Hi, thanks for the opportunity and congratulations on a good growth performance in Q2. My first question is on margin, sir. In the jewelry segment, there has been a 270 bps margin drop. I just wanted to understand if you could segregate this into various margin brackets? Is it like due to pressure in gold price margin, weaker revenue mix or higher promotions on making charge, marketing, etc? So broadly if you could help us understand the breakup of this.
Ajoy Chawla
Hi, this is Ajoy here. We had two, three impacts of margin this quarter. One was a substantial part of it is on account of the one-time custom duty loss, which has flown in already part of it in this quarter and partly in the next. That’s a substantial part of it. Beyond that, it is to do with the studded mix being lower than the expected one again on account of two factors. One is there was a gold rush of sorts in quarter two. Therefore, the gold component was much higher, including a substantial rise in gold coins and bullion purchases. And the other is in studded, the solitaire particularly the large carat stone demand has been under pressure due to price uncertainties in the market linked to international demand-supply situation. So all these three factors actually contributed to most of the reasons for the margin drop. Some amount of marketing investments for the brand, etc, to drive growth would have contributed, but that’s not substantial. That would be a very small impact.
C K Venkataraman
And maybe if you can just quantify, Ajoy, custom duty impact in the quarter is INR90 crores.
Ajoy Chawla
Yeah, that’s mentioned in the PPDA, sir.
Devanshu Bansal
Ajoy, I also wanted to understand the reason behind this weak sort of growth in studded. Obviously, solitaire you mentioned. So if we have to divide it into two broader reasons. One is from a studded perspective, the other competition is sort of giving a relatively better pricing on studded. That is one. And the second obviously is the growing noise around the lab grown diamond. So what do you attribute this to as of now among these two reasons?
Ajoy Chawla
So as I said, solitaire demand has been a big contributor to the impact on overall studded. If I exclude solitaire and look at the growth without solitaire, actually the studded growth is quite healthy, okay? And even within solitaires, I can further specify that the bigger stones where price uncertainty is high and where there is a certain investment mindset which exists for those people who are buying higher carat stones, 1 carat, 2 carat and so on and so forth, they have been holding back because they’re waiting for prices to settle down. Now it is not entirely clear is it because of lab grown, but it is also true that international demand in China and many other markets which have nothing to do with lab grown has also been on the back foot and therefore, there is a demand-supply issue on large sized solitaire stones. Competitive pressures wise, I don’t see a big issue because as I said studded jewelry demand has been good and in fact, buyer growth have been in healthy double-digits across price banks, so even the sub INR1 lakh price band which some people might ask. So actually, we are very happy with the buyer growth in studded. Therefore more customers are in the market for studded.
Devanshu Bansal
And just a small follow-up. What would be qualitatively the margin difference between within solitaires within studded and the other smaller pieces that we sell under the studded jewelry?
Ajoy Chawla
No significant difference.
Devanshu Bansal
Understood, Ajoy. Okay. Thanks for taking my questions.
Operator
Thank you. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Tejas Shah
Hi, thanks for the opportunity. Ajoy, the first question is most — with most categories — consumption categories at large being soft this quarter, except our jewelry has actually done well at large even as a sector. How do you gauge consumer sentiment? Any early read on festive or wedding demand trends also?
Ajoy Chawla
No, I think the consumer sentiment was good, I would say, in this quarter. The only slight, let’s say, adjustment we have to make, last year Shradh was in October, most of Shradh — all of Shradh. This year 13 days out of the 15 days of Shradh was in September. So it kind of shifted quarters and that — while we factor it into our business plan that when you look at it from a calendar perspective may not strike you. And therefore, I see sentiment to be very good and even festive sentiment has been excellent. So I think it’s fantastic.
Tejas Shah
And the same you would extend to wedding jewelry demand also?
Ajoy Chawla
Yes. Wedding jewelry demand started picking up post the custom duty reduction announcement because there were many sensitors, which we believe from first quarter and election and all of those factors which impacted first quarter who were waiting. Once gold prices corrected, many people came in. And as we speak also because festive is a good period to also pick up jewelry festive, wedding has picked up and we think it’s a good run ahead for the next two quarters.
Tejas Shah
Sure. A small follow-up there. So with high gold prices, are you seeing any shift towards lighter or more affordable jewelry or any preference trending across price points regions you can share?
Ajoy Chawla
Actually, no. We have seen that higher value jewelry in gold especially if I look at it has continued to do well. In the lower — very low price points because of the price of gold having gone up, some products have moved price bands. So on gold, I would say there is in fact no indication that it is only lightweight which we plant is. It’s pretty much what it is. In the diamond studded, there was some — but I think I’m not sure with the consumer sentiment. I think the ticket size in studded was impacted partly on account of solitaires and partly on account of a delayed launch from our side in certain price banks. But I don’t see a any correlation coming out there. Lower price bands in diamonds have done very well, whether you look at CaratLane, whether you look at Tanishq or Mia. So not seeing any trends.
Tejas Shah
Sure. And the last one on lab grown diamond. So we have been wait and watch or monitoring pace for last few quarters as you called out. Any early findings on consumer interest now or any pilot initiatives underway that you can share?
Ajoy Chawla
No, we continue to observe. We are not seeing inquiries across our stores other than clarifying that all the diamonds we are selling are natural, etc. We continue to observe and study the customer and keeping a close track of it. So as of now, nothing more to report.
Tejas Shah
That’s all from my side. Thanks and all the best.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Avi Mehta
Yeah. Hi, team. Thanks for the opportunity. Just on the margin front, first, we have seen the first half at almost about 11.3% adjusted for this custom duty. Could you — would you still look at 11.5% to 12.5% for the year? Is that a range that we can kind of — how should we look at FY ’25 if you could give us some sense?
Ashok Sonthalia
Okay, Ashok here. I think given what we have done in H1 and the likely a traction of gold continuing, I think FY ’25 looks like more between 11% and 11.5% and then maybe we can come back that are we going to go back to our original guidance for the next year.
Avi Mehta
Got it, sir. Perfectly clear. And just second question is on — again, sorry on lab grown diamond. I hear you clearly on the consumer adoption. I just wanted to appreciate that within the Tata Group, some of — one other company has launched lab grown diamond. Does that indicate or preclude our any possible entry by us or how should we look at that or would love to hear your thoughts on the same.
C K Venkataraman
Hi, Avi. Venkat here. Trent is big box retailer and besides sells multiple categories. So they sell perfumes, Titan sells perfumes. They sell women’s bag, Titan sells women’s bags and salwar kameez and so on. So in a way, it is natural for a big box retailer to consider fashion jewelry and the introduction use of the lab grown diamonds in the fashion jewelry. We are a category expert. We create brands. We create EBAs and we play the game very differently. And both of us are free to pursue our own destinies. I think because the lab grown diamond is a strategic subject in the jewelry industry, this obviously this question is raised as opposed to perfumes, bags, I understand that. But it certainly does not preclude us at all from doing anything that we want. It is just that we choose to do our business in a particular way and this is a matter of such strategic importance that we would announce it when we were ready to announce. That’s all.
Avi Mehta
Got it, sir. And sir, just to clarify, if I heard your comment correctly, the current performance of non-solitaire studded jewelry reaffirms our expectations. That’s the right read through on how would you look at lab grown.
Ajoy Chawla
Yeah. The non-solitaire side of the demand is very good and healthy.
Avi Mehta
Perfect, sir. Thank you very much. I’ll come back in the queue.
Ajoy Chawla
Even solitaires, the smaller carats are actually doing very well. So these are carats where the investment oriented buyer is there who is waiting and watching. And that’s what customers have also told us.
Avi Mehta
And sir, any share that you could share of how roughly it would be salience for us than the large diamonds because I would assume it would be a little smaller share.
Ajoy Chawla
It is a fairly small share, but in the recent past, we had upped the game in the last two, three years. So we had clocked in very, very good growth. So the base effect has played a role. Otherwise, it’s a small share.
Avi Mehta
Thank you very much, sir. That’s all from my side.
Operator
Thank you. The next question is from the line of Jai Doshi from Kotak. Please go ahead.
Jai Doshi
Yeah, hi. Thanks for the opportunity. Just clarifying on the guidance for EBIT margin, the earlier guidance was 11.5% to 12.5% for the consol jewelry EBIT margin. So has this now changed to 11% to 11.5%? Basically it’s consol jewelry EBIT or standalone?
Ajoy Chawla
So yeah, you must appreciate that still Titan jewelry is the significant part of that. So whatever applies to Tanishq would actually hold true for the consolidated also, so yeah, it is overall.
Jai Doshi
Overall. So if I look at the first half numbers, recurring consol EBIT margin is 10.5% for jewelry business. And for you to sort of deliver 11.5%, it means the second half should be — 11% at the lower-end, second half should be 100 bps better than first half. So are there any sort of efficiency levers or any trends that you’re sort of seeing in the market that gives you confidence of improvement in second half margin improvement versus what we’ve seen in first half? And I’m referring to recurring, excluding one time impact of import.
Ashok Sonthalia
No. I understand. So some of the initiatives which have been taken on and they are in the early stage or some are slightly advanced stage kind of makes us believe that some improvement we can do. Even like diamond jewelries or the gold content and the inherent margin of that, the stuff goes are — have gone down slightly, may slightly stabilize. And even quarter three and quarter four likely performance which we think including CaratLane. CaratLane also margins trajectory would be slightly better in H2 for sure. And that is — that’s what gives us confidence in quarter — H2 we will be slightly better off than H1.
Ajoy Chawla
Yeah, I’ll just supplement on the demand-side, we have always maintained that this year quarter one would be the weakest because of the many, many factors at play. We spoke about it. H2 is therefore expected to be certainly better than H1 and certainly for diamond studded even more so. And that gives us the confidence that it would be a better margin play in H2.
Jai Doshi
Sure. And is it possible — so when we look at this quarter’s margin of 11.4% versus 14.1% last year, there is a 270 basis point drop. And when we look at 1Q, the drop was actually not that much on a Y-o-Y basis and 1Q was a much weaker quarter from top line growth or operating leverage perspective. So is it possible to break down this 270 basis point recurring EBIT margin drop this quarter? How much of that is attributable to, let’s say, weakness on the studded side or mix and how much of that is basically competitive pressure in the gold business?
Ajoy Chawla
Most of it is studded product mix and studded product mix and gold coin mix also being there and some of it as Ashok pointed out, the gold price component in the total material cost of the studded piece also adds up into that. And therefore, it is really linked to studded share, not so much on the competitive marginality. Studded margin will get impacted therefore on that gold price going up and product mix on account of studded share and gold coin share. These are the three factors beyond.
Jai Doshi
As a thumb rule, my understanding was 100 bps drop in studded share would account for about 20 bps impact on margin. Is that correct or you think it should — it will be much higher?
Ashok Sonthalia
No, we can’t confirm that because product level margin discussion we don’t give.
Jai Doshi
Understood. Sure. Okay. Thank you so much. I’ll get back in the queue. Thanks a lot.
Operator
Thank you. The next question is from the line of Percy from IIFL. Please go ahead.
Percy Panthaki
Hi, sir. Just one question on consumer behavior. So supposing if there is a consumer with a budget of, let’s say, INR1 lakh to INR1.5 lakh who wants to buy a diamond jewelry and supposing this customer is now saying that, okay, let me evaluate a jewelry made from lab grown diamonds, then what does he do in this situation? Does he buy similar type of jewelry by slashing his budget or does he more or less maintain his budget and upgrade the quality or rather the caratage of the diamonds?
Ajoy Chawla
It’s a very hypothetical question. I’ll try to answer it in the most actual way I can. INR1 lakh to INR2 lakh price segment has seen fantastic buyer growth for Tanishq this quarter and it continues. So I sense that customer is not swinging too much, okay? If it was, we would have started seeing some weakness. Second piece of information that I have picked up from whatever consumer understanding and market work is the moment lab grown jewelry goes beyond INR1 lakh, the customer interest significantly falls. In fact, most of the players are selling products largely in the sub INR1 lakh space and maybe INR50,000, INR60,000, INR70,000. There is a segment of people at the very top end who might be asking their jeweler to give them a lab grown and big stone, which may be in that INR10 lakh, INR15 lakh. That’s a — it’s difficult to estimate that demand. But most of the players that you see in the marketplace are selling pretty much sub INR1 lakh. So I think beyond INR1 lakh, there is a barrier in the customer’s mind is my understanding from whatever I have.
Percy Panthaki
Understood. Understood. So let’s say, supposing there is a customer who wants to buy in that INR1 lakh to INR1.5 lakh ticket size and supposing — I know you said that he is unlikely to go to lab grown diamonds, but supposing he wants to buy a very, very similar piece made through lab grown diamonds, then how much does he actually save on his budget? Does that 1.5 lakh become INR50,000 or does it become 1 lakh? What is the rough ballpark here?
Ajoy Chawla
It will be below INR50,000.
Percy Panthaki
Okay. So he basically even at a INR1.5 lakh ticket size which is a studded jewelry which means that there are multiple pieces of diamonds in it, even at that point, he saves like 65% of his cost.
Ajoy Chawla
See, I don’t know whether he can get the same piece with the same stone configuration. He may be able to get something at INR50,000, INR60,000, which may not have exactly the same stone. It’s a very difficult hypothetical question. But by and large, I think he would not — the person would bring it — the budget would come down to INR50,000, INR60,000, maybe max INR70,000 or may buy two, three piece.
C K Venkataraman
And for what it is worth, to answer your first question in the American market, the general tendency of people is to buy a much bigger product for the budget that they came with. So INR1 lakh — if you look at $10,000, so I would buy a much bigger stone for the $10,000 and in a way make myself and my bride to be happy with that bigger stone. And that’s the tendency in the U.S. as opposed to buy a similar product at one-third the price.
Percy Panthaki
So if that is the case, Venkat, then what stops us from getting into this segment? Because my understanding is what’s stopping us is the value depletion that if we start offering LGD, the top line itself will suffer even if the volume goes up. But if the top line is more or less maintained and the gross margins anyways are quite healthy on LGD, then what is the detriment in you launching this product?
C K Venkataraman
Why do you think anything is stopping us from getting into this? We have not yet launched.
Percy Panthaki
Right. Okay. Understood. That’s all from me, Venkat. Thanks. Thanks, Ajoy and Venkat.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Nihal Mahesh Jham from Ambit Capital. Please go ahead.
Nihal Mahesh Jham
Yes, good evening. I had my first question on the demand with Ajoy. The press release mentioned that there was strong momentum till mid-September. I just wanted to clarify that after the initial spur that you saw post the duty cut, has the demand trend sustained or there has been a sharp moderation? Just wanted to clarify that part first.
Ajoy Chawla
No, it’s sustained. I would only say that there was a pause during this period which started around the 17 September till the end of the month and actually till 2 October. From 3 onwards again it picked up. Of course, this excludes Bengal because they start their puja purchases. But after that it’s continued well into the season.
Nihal Mahesh Jham
Understood. That’s clear. The second question was again on the LGD bit. As you also highlighted based on what we’ve discussed in this call, the demand for LGDs is mainly in the sub INR1 lakh price point at this point in time. And more than Tanishq, I think CaratLane operates in that points with a very high share of solitaires. So is it right to say the kind of a customer that a CaratLane serves and also say LGD becomes more fashion oriented that, that is the brand which could see maybe more migration of customers and maybe that’s the brand where LGD launch would make sense. Just your thoughts on that?
C K Venkataraman
Actually, we wouldn’t like to share anything about our strategy, whatever that is, when it is going to be on this. So it would be — it is — actually if you really think about it, it’s a matter of strategy that you’re asking us to agree before we actually launch anything like that, right? So like I said earlier on the call, we would speak about it in detail when we are ready to speak about it.
Ajoy Chawla
Just one factual correction that CaratLane doesn’t have — it looks like you said that they are selling lot of solitaire that —
Nihal Mahesh Jham
No, I meant started, I’m sorry.
Ajoy Chawla
Studded, yeah.
Nihal Mahesh Jham
The customer match.
Ajoy Chawla
So let me also just reiterate another point. CaratLane growth has been fantastic in this quarter. Mia growth has been fantastic in this quarter. Tanishq sub INR1 lakh studded growth has been fantastic this quarter. And overall buyer growth also has been in early double-digits, which is very good for studded. So there is no current sense that this is getting impacted if that’s the hypothesis you have.
Nihal Mahesh Jham
Sir, I’ll just correct, maybe it is not about this quarter and not about the impact, but just that would that customer be more relevant from an LGD perspective, let’s put it that way rather than a punish customer.
Ajoy Chawla
Very difficult to comment, because right now, there is no data to give evidence on that front, not just now, over the last several quarters. And this question has been coming and this hypothesis seems to be alive since the last several quarters almost continuously and currently, the data is not showing up.
Nihal Mahesh Jham
Understood. Sure. Thanks, Ajoy. That was it from my side.
Ajoy Chawla
Thank you.
Operator
[Operator Instructions] The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Shirish Pardeshi
Hi, good evening. Thanks for the opportunity. Ajoy, just two observation. Our studded ratio has come down to 30% and in Tanishq, it has grown about 12%, while in the CaratLane what I’m reading is about the growth is about 41%. So is the nature of the business — what I’m trying to understand, is there any overlap of the customers between CaratLane and Tanishq? And what you mentioned is the shift which is happening from, say, a particular customer who is buying, say, less than INR1 lakh studed at Tanishq is now moving to CaratLane?
Ajoy Chawla
So we do look at it as a portfolio. And in sub INR1 lakh studded, as I said, the portfolio is growing double-digits in terms of buyer growth and the growth in CaratLane is certainly high because of the expansion that has happened in the past and will continue to be showing higher growth. It’s also a much smaller base. In the case of Tanishq, there is no reason to believe because even Tanishq has a large dependence on the sub INR1 lakh studded number of buyers. And we have seen actually good buyer growth even for Tanishq and Mia, which is there in Tanishq stores as well as Mia as a channel by itself. So there may be some flow here and there that keeps happening, but it’s very difficult to quantify that. We have not really got into that level of debt. We do look at it as an overall portfolio. Yeah, I think Saumen wants to add.
Saumen Bhaumik
Saumen here. CaratLane’s play is by and large in the sub INR50,00 if you look at the real price point based segment. So it is not even at INR1 lakh. It is significantly below INR1 lakh and INR50,000 — INR30,000 to INR50,000 is the max of our product that we sell. Yeah.
Shirish Pardeshi
So the reason why I’m saying I had a first hand experience around Diwali. So we went a nearby store and which is next to CaratLane and we saw a lot of people around CaratLane and people were completely buying only gold from Tanishq. So if there is a segmentation happening within the consumer minds, that’s my fear.
C K Venkataraman
Actually, just there are multiple angles sitting here. First of all, CaratLane is Tanishq. Secondly, CaratLane is so famous for good looking affordable jewelry. Tanishq is so famous for exclusive jewelry. And Tanishq is — the first thing you think of Tanishq is not good looking affordable. This is not Tanishq. Tanishq is like when you ask so much about the wedding, for example, or if you take the campaign of Tanishq for Diwali, Nav-raani, which is exquisite big jewelry, natural place for customers to go for affordable good looking jewelry would be a CaratLane or a Mia. And therefore, you will see a lot more people sort of crowding in that store and in a small store than people will look crowded in a big store, 20 people will look much across it. So that’s also there. But the more important thing is what the brand is famous for and why people buy. A lot of gifting happens in CaratLane, all these are there, dimensions.
Ajoy Chawla
And gold — the season time gold is a very big draw. The play of gold in Tanishq is far higher than the play of gold in CaratLane or Mia for that matter. It’s completely the other way. So there will be a crop for gold always.
Shirish Pardeshi
Okay. Just one quick follow-up on jewelry. Venkat, what is the new buyer contribution or new buyer growth because you have given total buyer growth is at 12%.
C K Venkataraman
The contribution of new to repeat in the current quarter continues to be similar as last year. The growth is around the same, around the same percentage that we have seen. So both have grown at the same rate.
Shirish Pardeshi
Okay. Second and last question to Suparna. What is — we are seeing that analog is doing much faster and last two, three quarters, it’s double-digit. So is there particular trend or is there particular product innovation or mix we have tried to showcase to the consumer and how long this growth will continue? Do you think this is now in the base?
Suparna Mitra
Yeah. So Suparna here. You’re right, analog has seen good growth in the last few quarters and it’s on the back of very strong product design and innovation. Also on premiumization, so if you see Titan brand or the Helios chain or say international brands doing very well, the premium sub brands like Nebula, Edge, etc, doing very well. So this has been going on for a while and it is — this trend is becoming stronger and it is really getting manifested in very well designed collections with very good value for the consumer for that price point and also supported by very good execution both in our stores, on round stores as well as in the play that we have in online. So it’s a combination of many things coming together. And we do believe that our product pipeline and the overall product strategy will keep delivering good results for the next few quarters.
Shirish Pardeshi
Yeah, I got that. Does that mean that 14.9% EBIT margin what we have shown, there is upside to this margin?
Suparna Mitra
Difficult to say, I would go back to what we had said during the Investor Day that 13% to 14% is definitely in the range that we will commit to.
Shirish Pardeshi
Okay. Thank you and all the best.
Suparna Mitra
Thank you.
Operator
Thank you. The next question is from the line of Krish Shanbahar, an Individual Investor. Please go ahead.
Krish Shanbahar
Yeah. Sir, my question is on the loss due to import duty cut. Historically, you have always said that you hedge your gold, so there is no impact of falling gold prices. So why is there a loss when you have hedged for — hedged yourself?
Ajoy Chawla
So let me try to explain, we source a lot of gold through gold on lease program where the price — which is a natural because price is fixed on the date of sale. So that gold inventory is in a way not price wise exposed, but custom duty is already paid. The day we source that gold on lease, custom duty is paid, but the price is fixed on the date of sale. So that inventory is always exposed to custom duty variation. In the past, sometime when custom duty went up, we made some gains also and that also if you go in our quarterly results, you will find that we have talked about that. This time the drop was very steep and that is why insignificant loss.
C K Venkataraman
So just to elaborate to make it totally clear, if INR100 was the import rate and INR15 was the customs duty paid, we paid the INR15 rupees, but that INR100 was floating till we fixed it, which we typically match with sales. So if INR100 become INR105, we sold it at INR105, fixed it at INR105, no loss, but the INR15 was INR15 and we couldn’t hedge that INR15 separately. And if the INR15 fell to INR6 as it fell, INR9 we had to lose. We ended up losing.
Krish Shanbahar
Thank you so much for the clarification, sir.
Operator
Thank you. The next question is from the line of Saurav Mondal [Phonetic] from RK Advisory. Please go ahead.
Saurav Mondal
Hello. Am I audible?
Operator
Yes, you are. Please go ahead.
C K Venkataraman
Yes, please.
Saurav Mondal
So my question is about analog watches. What is the trend there? And if you could give some sense about price category trends. And last three years and going forward, what is the revenue-share of analog to wearables sitting?
Suparna Mitra
So the trend is like I mentioned earlier, there is a very clear premiumization trend where watches above INR5,000, INR10,000, INR15,000, etc, are doing very well. We are seeing good growth in like I said brand Titan, which is kind of spearheading the growth. As far as the proportion of analog to wearables, the last couple of years we have seen wearables share go up. But now with the wearables market in a bit of a correction mode, we are seeing that the analog share is higher.
Saurav Mondal
Okay. Thank you for answering your question.
Suparna Mitra
Thank you.
Operator
Thank you. The next question is from the line of Aditya Soman from CLSA. Please go ahead.
Aditya Soman
Hi, good afternoon. Two questions from my end. So firstly, in terms of steady state margins for jewelry, what would be sort of a steady state margin one should expect over a medium-term? And has that guidance on that changed at all? And secondly…
Ajoy Chawla
Your voice is not very clear. Okay. Steady state jewelry margin, right? That is your question.
Aditya Soman
That’s correct. Yeah.
Ajoy Chawla
And second question, you had a second part of your question.
Aditya Soman
Yeah. And the second question is on these emerging businesses. We see, I mean, the level of profitability even on a year-on-year basis hasn’t improved. In fact, it’s worsened slightly. So how do you think the trajectory on profitability plays out over the next few years? And what will be the drivers for improvements?
Ajoy Chawla
Okay. So emerging businesses for sure are in the investment phase. Growth is far more important than margin. But yeah, as the scale is growing, some of the gross margins are improving, so they can — but I think we are right now focused on them achieving the right scale and rightful position in the market. Jewelry as we answered earlier, for FY ’25, we think 11% to 11.5% seems to be the band which we will able to deliver. And then at the end of the year and beginning of next financial year, we will be able to have much more clarity that going forward what kind of number can be delivered. And then maybe we’ll give, but no significant change in terms of the structure is happening, 11.5% to 12.5% to now we have talked about right now 11% to 11.5%. So we might go back to the original band, but yeah, we will wait for some more time to kind of give that guidance.
Aditya Soman
All right. Very clear. Thank you.
Operator
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.
Siddhant Dand
Yeah, hi. Sir, my first question was about there has been a proposal to hike GST on luxury watches about INR25,000 I think. So what percentage of our sales would that be? And secondly, would it hamper our plans to open ultra luxury watch stores in Helios?
Suparna Mitra
So right now, it’s a proposal. I think the group of ministers has recommended to the GST Council. So we are not — we will have to wait and see how it actually pans out. Our proportion of watches above INR25,000 is not very high right now. But given the fact that premiumization is a very continuing trend, it will become higher and higher over the next few years.
Siddhant Dand
Could you give a rough band of what percentage of top line would those be?
Suparna Mitra
At this point, we’ll not be able to share.
Siddhant Dand
Okay. Secondly, my question was regarding our golden harvest. Competitors have come up with a little more aggressive schemes. So has that program been affected?
Ajoy Chawla
No. In fact, we ourselves have innovated a little bit on the golden harvest. We have launched another version which also enables customers to fix their gold rate, etc, and the benefit is different from the golden harvest usual scheme. So put together both our programs are doing well and enrollments have been good. We have not been impacted by whatever competitors have offered. They have continued to offer historically also more aggressively. So it’s not that something new has happened.
C K Venkataraman
But I think there is an intrinsic sort of relationship between preference for that brand and preference for that golden harvest equivalent of that brand. People want to buy Tanishq and people sign-up with GHS. People want to buy some other brand, they sign-up this program of that.
Siddhant Dand
Okay. Understood. My third and last question would be one of our biggest moat was we were able to give a carat meter and verify people’s adulterated gold back in the days. So have we — is there any sort of pilot or any idea around identifying whether someone’s jewelry is a lab grown one versus a mined one within the store itself?
C K Venkataraman
Good idea. We should attempt it. We mentioned it in our media interaction when we did the DBS tie-up. We have done a tie-up and we anyway use all their equipment for a lot of our value chain to ensure there is absolutely no contamination. And they themselves have also innovated and come out with a more, let’s say, smaller device, etc, which can be deployed in stores. So we are going to experiment with some of this in some of the cities and see what it yields. And we are also anyway separately testing out other competition and other jewelers’ products to see how much is truly natural, how much is mix, etc. So all that work is on. But good idea, we’ll consider your thoughts.
Siddhant Dand
So are you seeing on-ground adulteration going up in general?
C K Venkataraman
I don’t have data for that right now. It’s too early to — we have started doing some studies. But very interestingly on gold on a side note, even today we get 2, 3 carats below the below the 22 carat in our exchange program and it surprises me now. And in certain markets it goes down by even more — few more carats. So even after so many years of hallmarking and so many years of doing it, we still get very low carats in our gold itself.
Siddhant Dand
Okay. That’s interesting. Okay. Perfect. Thank you.
Operator
Thank you. The next question is from the line of Rahul from Alien [Phonetic] Investment Service. Please go ahead.
Rahul
[Indecipherable]
Ajoy Chawla
Can’t hear you.
Rahul
I’m audible. Am I audible?
Operator
Rahul, please go ahead with your question.
Rahul
Am I audible right now?
Ajoy Chawla
Yeah, yes.
Rahul
Yeah. Thank you so much for taking my question, sir. Sir, like in the last quarter, like we have data like — the expansion plan of Tanishq we have characterized stores. So could you provide an update about the store expansion plans, especially how many Tanishq and Mia stores have been added in Q2 and are you guys on track to meet the year-end target? So would be [Indecipherable]?
Ajoy Chawla
Sure. So we’ve added in Tanishq 22 stores. In fact, in this month itself, in October, we’ve added another 10 or 11 stores rather. We have added 33 therefore up to 30 October. And our aim is to add between 40 to 50 depending on finding the right property, etc, etc. And typically that’s what we’ve added. Mia is also likely to reach 250 by the end of the fiscal. On CaratLane, Saumen will share.
Saumen Bhaumik
Yeah. As far as CaratLane is concerned, we very recently crossed a milestone of 300 stores. Currently, it is 301. Net addition is 29 for the year and we hope to add another 20 before March.
Rahul
Okay. Okay. Thank you so much, sir.
Operator
Thank you. The next question is from the line of Ashish Kanodia from Citi. Please go ahead.
Ashish Kanodia
Yeah. Thank you for the opportunity. Sir, first question is on the competitive intensity. So given the steep increase in gold price, if you can highlight how the regional and local players are behaving? Are they kind of giving some offer on the gold price because we also noticed Tanishq was offering discount on the gold price for the first time and post the discount, the gold price was matching the gold price what some of the other large players offer. So that is the first question.
Ajoy Chawla
Yeah. You’re right, the competitive intensity on gold rates itself has gone up, thanks to very high price of gold and many, many local players have been either on their own or sometimes in response to other national players or chains come out strongly with gold price offers. And this year, we saw many players do that. So we also decided to play it a little differently and ensured that our discount payouts during the festive season was smartly distributed between making charges and gold rate and other offers that we do. So psychologically, it helped the customer kind of feel a little bit more comfortable. But we still manage the payout in a manner that we — we look at them in totality and therefore, it’s not just a flow through.
Ashish Kanodia
So instead of more discounts, part of the discount was routed through lower gold price, is that the right understanding?
Ajoy Chawla
Yeah. And what also it helped interestingly is during festive the exchange became even more attractive, because people bring in their old gold at a certain rate and then this is a discount, not the gold rate per se. So it actually means they gain — in their mind, they gain a lot more by bringing in old gold and we wanted people to do a lot of that. So we ran a festival of exchange as well during this period and this played to that.
Ashish Kanodia
Sure, sir, that’s very helpful. The second question is just going back on the LGD part, you have seen over the years like how CZ or ADs have kind of — instead of becoming a jewelry, it basically ended up being just a fashion accessories, right? So any learnings from that or anything, I mean, maybe when AD was ramping-up in India, we were in a very different zone. But any similarities or difference you see when AD or CZ was scaling up and now when LGD is scaling up? And second, given what, say, CZ has done and maybe some other players are also doing, do you see ultimately lab grown diamond just fading away as accessories rather than really replacing it as a jewelry?
C K Venkataraman
See, the first thing is that certainly LGDs are far superior to ADs and any other form because optically, chemically, physically, they mimic — they are diamonds in a sense, right? And they are just grown in the lab. So to that extent to compare them with AD is perhaps not right. The other thing is finally, the sustainability side of LGD is also an angle which is being brought in and all that. So I won’t compare it like that, but we’ll have to actually see the way it plays out in the next many years for now. It’s not easy to predict how it will actually go. And your second part, what was it to do with the website?
Ashish Kanodia
My point was because if you are getting a LGD in a big box retailer, as a consumer, you will not necessarily see it as a jewelry, right? It ultimately become a fashion accessories.
C K Venkataraman
Correct. So that was the point I was making about why website is choosing to do it like this and how it does not really impact on whatever we may do.
Ajoy Chawla
Also what we have heard and seen, Pandora and Swarovski have gone into that space and how they shape that category and how it does — and of course, price is coming down. So you could be right, but really very difficult to put a forecast on that.
Ashish Kanodia
Sure, sir. So this is super helpful. Just one last bit is on the custom duty impact. So last quarter, I think you called out that the total impact could be maybe between INR500 crores to INR550 crores. And given that the gold prices have actually moved up, my understanding is the impact could be slightly lower than that. So is it significantly lower to call it out separately that instead of INR550 crores, the total impact could be lower?
Ajoy Chawla
No. Actually that was a estimate, of course, at that point of time. And the gold prices going up have a very, very little impact on that. So actually, our current estimate which is much more firmer is that quarter three may witness about INR280 crores, INR275 crores, INR280 crores kind of number.
Ashish Kanodia
Sure, sir. This is super helpful. Thank you so much.
Operator
Thank you. The next question is from the line of SM from Mehta Family Office. Please go ahead.
SM
Good evening, sir. Thank you for giving me this opportunity. I have one question with regards to lab grown diamonds. In the past seeing something in the pearls, now pearls were considered as precious and luxurious jewelry, but however, pearl farming changed the entire situation and thereafter the pearl lost all its charm. Is lab grown doing the same to of mined diamonds?
Ajoy Chawla
Your guess is as good as mine to be honest. And frankly, it’s very difficult to predict what will happen. We can look at what happens. And yeah, I mean — so it’s very difficult to gauge. We’ve also had that in emerald. We also had that in this, but that same trend in play out like it played out in pearls, I don’t know. Emeralds continue to be natural, emeralds and rubies continue to be very important.
SM
Got it, sir. Thank you.
Operator
Thank you. The next question is from the line of Saurabh Patwa from Quest Investment Advisors. Please go ahead.
Saurabh Patwa
Thanks for the opportunity, sir. Sir, just wanted to have your thoughts on, sir, with the rising gold prices and lack of commensurate pricing increase in diamonds, in fact, which has been falling, do you see rise of the 18 carat and below kind of jewelry to make the products more — in terms of your — in terms of most of the dwellers making those products affordable as well as margin — to maintain their margin for the studed Jewelry? Is this could be a trend we could see as we move ahead?
Ajoy Chawla
You are asking only for studded?
Saurabh Patwa
Studded, yeah, largely for studded, sir. So that’s how you will make the — jewelry is more lighter as well as your — the mix for your diamond and gold mix could be — the proportion in terms of value could be maintained.
Saumen Bhaumik
There is actually — this is Saumen from CaratLane. There is actually enough evidence especially in the Northern region and the Western region. The high value jewelry diamond has moved to 14 carat and it has happened over a period of time and it is actually a substantial segment of the higher end of diamond jewelry.
Ajoy Chawla
So typically also I’ll clarify, most of studded jewelry has been in 18 carat. There is a small segment of 22 carat studded jewelry only in the South, which is a closed setting which is called. That continues to be what it is and 14 carat is the other bit which in fact all of Mia is — most of Mia is 14 carat and a good part of CaratLane is also 14 carat and now what Saumen mentioned. So whether 18 will become 14 as we go forward for the bulk of the market is difficult to say because there are enough people who say if I’m buying a diamond jewelry and especially if it is in the INR5 lakh plus, INR8 lakh plus in certain markets, they are okay. If it is 14 in many markets, they are saying no, it has to be 18. So it’s not a very clear trend, it’s a mixed bag. But yeah.
C K Venkataraman
The customer segments like the point that Ajoy was making about emeralds, there is something to be said — 18 carat is closer to being pure in a sense and therefore when I’m buying something expensive exquisite, I’d rather have diamond. It’s partly psychological, partly color and all that. So we are so much into 18 carat diamond jewelry and not 14.
Ajoy Chawla
But just to share with you, we keep experimenting in different markets and we keep learning from it. And there is a geographic preference difference that Saumen also pointed out.
Saurabh Patwa
Yeah. And sir, just second question on the — when you highlighted there is a price fall in the solitaires, how does it work for the smaller diamonds which we use for our studded jewelry? How has the pricing been there? While you may not — while selling you may not be explicitly mentioning that, but from your buying perspective, those diamonds, how the pricing been?
Ajoy Chawla
Pricing has been fairly stable. In fact, it had gone up post the Ukraine war because of Alrosa sanctions, etc, and therefore there was a certain shortage of supply. Thereafter, it’s been pretty stable. There will always be deals going on here and there. In fact, we have not seen any softness in that price in the smalls. Though Rapaport keeps publishing all kinds of data, but at the very small ones, their data reports are not really relevant. It’s mostly in the solitaires where their reports are relevant. So it’s stable I would say.
Saurabh Patwa
Understood, sir. Lastly, just a quick clarification. You highlighted that you expect around INR280 crores of inventory in loss because of custom duty. Is this included in your margin guidance?
Ajoy Chawla
No, margin guidance is always normal only. We have always clarified that this is one-time event. Margin guidance, normalized guidance. So you have to account for — adjust this INR280 crores in quarter three.
Saurabh Patwa
Understood, sir. Thanks a lot, sir, and all the best for the coming quarter fiscal year.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Sheela Rathi
Yeah. Thanks for taking my question. So first question was actually just in connection to the previous question. Sir, what was the key reason for the EBIT margin improvement for CaratLane this quarter and should we expect the trend to continue to improve?
Ajoy Chawla
Yes, Saumen would…
Saumen Bhaumik
Hi, this is Saumen. Part of the reason is about the sales growth that has been significant. Second reason is also we have been able to hold studded margin and there has been also some marginal gain that would have come through our — the price of procurement, etc. All these three. On the cost front, I think we have managed to contain our cost. All put together would have seen about 1% percentage plus debt cover last year and it is expected to be better.
Sheela Rathi
Okay. Understood. And second, Ajoy, for you, historically you have guided us in terms of what the gold exchange for Tanishq jewelry as well as non-Tanishq jewelry has been. So if you could update us on that number for this quarter? And additionally, if you can tell us if there is a number — similar number which we have with respect to diamond exchange and if we have that number for this quarter will be very helpful.
Ajoy Chawla
I don’t have a number for diamond exchange, though it is an integral part of the Tanishq Exchange number which I have historically given. First, on the gold exchange, which is non-Tanishq gold, this quarter, we saw a lower gold exchange probably because I suppose people saw a build on gold and wanted to hold on the gold as much as they could. So it’s 3 percentage points lower contribution than usual. That’s what it looks like. But if I discount the sale of coins because that is like buying coins, then it’s a very marginal drop in contribution, okay? So then it’s only a 1% drop in contribution. So it could be a very temporary quarter two specific phenomenon. And in Tanishq Exchange, a significant part, not immaterial part or a material part of it comes also from solitaire exchange that has certainly reduced, especially at the higher end. I don’t have a number to give you on that. So I’m not able to share with you. But still ballpark, we are in that 8%, 9%, sometimes witnessing to 10%, it maybe 8% or 9%. I don’t have an exact figure right now.
Sheela Rathi
And if I may ask, can a customer who owns diamond jewelry — studied diamond jewelry or a solitaire, can they exchange it for gold jewelry? I mean, is that…
Ajoy Chawla
Yeah.
Sheela Rathi
Okay. And just one final question. With respect to inventory, I mean, you attributed the custom duty related inventory loss, but will we have any inventory loss with respect to solitaires in the upcoming quarters?
Ajoy Chawla
No.
Sheela Rathi
All right. Thank you very much.
Operator
Thank you. Ladies and gentlemen, this was the last question for today. I now hand the conference over to Mr. C K Venkataraman for closing comments.
C K Venkataraman
Thank you very much, everyone. So like I started, it’s been a very satisfying quarter for us from a growth point of view and across businesses, it’s been quite satisfying. We’ve already spoken about jewelry and the analog watch business and just spending a minute on the analog watch business. I think what the team has done and the division has done is actually focus substantially on product innovation, retailing, branding and premiumization and we expect to push the envelope on this and continue this growth trajectory for many, many, many years because this is actually a product with limitless appeal. So that’s one long-term comment on watches.
As far as eye care is concerned, there is no question, but I want to clarify. I will tell you that the strategy that we started executing about eight, nine months back continues to be in full swing and the customer acquisition rate continues to be at a very satisfying level. People are so excited about the Titan Eye Plus offering products, affordable fashion on the one hand, affordable progressive lenses on the other, premium frames and sunglasses on the third. So across the spectrum, we are delivering exceptional, refined product value and building a solid foundation of growth over the next many quarters and you’ll hear about all this in the results in the quarters to follow.
The foundation of Taneira has become stronger and stronger and stronger and we expect certainly FY ’26 to be a sort of blockbuster year for Taneira. We aim to take it to its rightful place in the ethnic wear industry and make it a very prominent, very respected name in that market. We are an established name in the perfumes business and doing very well in H1. The first exclusive brand outlet of IRTH was launched in October. It’s a fabulous store. All of you who live in Mumbai, please go to the Palladium Mall and take a look at this, an idea which is waiting to explode and you’ll see the explosion of that across the country over the next many months and combined with the omni potential for that category, we aim to make a big mark in the organizing, formalizing, right serving of that category as well.
The international business continues to be on a roll. The first half as well as the October season were very, very exciting with opening stores by and large as per plan and everywhere hitting the ground running to exceptional customer claim. And even the engineering business as one of the investors had messaged me about a week back, team is also doing very well. So overall, the portfolio of Titan Company is in a very, very good place. And thank you very much for all the support and confidence that you have put on us over the years and we hope to keep you delighted in the quarters to come. Thank you very much.
Operator
[Operator Closing Remarks]