Titan Company Ltd (NSE: TITAN) Q4 2025 Earnings Call dated May. 08, 2025
Corporate Participants:
C.K. Venkataraman — Managing Director
Ajoy Chawla — Chief Executive Officer
Ashok Sonthalia — Chief Financial Officer
Kuruvilla Markose — Chief Executive Officer, International Business Division
Saumen Bhaumik — Managing Director, CaratLane
Analysts:
Manoj Menon — Analyst
Avi Mehta — Analyst
Videesha Sheth — Analyst
Arnab Mitra — Analyst
Kunal Vora — Analyst
Percy Pathanki — Analyst
Vishal Gutka — Analyst
Devanshu Bansal
Jai Doshi — Analyst
Harit Kapoor — Analyst
Tejas Shah — Analyst
Vivek M — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Titan Company Limited’s Q4 and FY25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation[Operator Instructions] Please note, that this conference is being recorded.
I now hand the conference over to Mr. C.K. Venkataraman, Managing Director, Titan Company Limited. Thank you and over to you, sir.
C.K. Venkataraman — Managing Director
Thank you very much. Good evening everyone. It’s wonderful to meet at the end of the wonderful quarter. Performance very, very satisfying across segments, across countries and clearly when, despite the surround being challenging, whether it is gold rate on the one side or pressures on discretionary consumption, I think the innovation engines of Titan Company execution excellence on all fronts, assets in the air on the ground, partners of exceptional caliber, deep and wide across the world now, and the tens of thousands of what we broadly call Titanians, putting their heart and soul into everything that they do has delivered a very good performance.
Very satisfying and over to you for the questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manoj Menon from ICIC Securities. Please go ahead.
Manoj Menon
Hi. First of all, good luck to Venkat for all the future endeavors and good luck to Ajoy, as you take on the new role. Good luck and God bless you both. Couple of questions from my side on the jewelry business. One, given the incessant sort of price increase which you have seen in the gold commodity, I just want — just some snippets from you in terms of your research as well as anecdotal evidence on, what the consumer telling you, right? I mean so is the consumer cutting back on the volume side of it? Is the consumer asking for more 18 carat and more importantly, what do you — how do you see this evolving and what are the plans in place? That’s the first one.
Ajoy Chawla
Thanks, Manoj. Just reminding you that, this is effective the 1st of Jan, the changeover. We are still a way to go. But thanks for your good wishes and answering your question on what the consumer saying. So two, three things are coming out and this is now, I’m seeing this over the last several months as gold prices have kind of clipped up so sharply. We are seeing in the sub INR50,000 price band, very specifically more in gold and little bit in studded also, there is an impact on the consumer sentiment there. Now some of it is us vacating price points, because simply gold price goes up, the same product goes into a certain higher price band. That is one part of the story. But there is continued, let’s say, customer sentiment in that lower price band where we are seeing some, buyer being a little reticent.
Second piece is yes, customers are more open to 18 karat gold, though we don’t really have the full information as yet, we have just launched some collections in 18 karat gold in certain parts of the country for traditional customers as well and we hope that we’ll see good response and I know that in Carat Lane we have launched something in 9 carats as well. So there is early traction and I think more and more customers are going to be open to lower karatage simply because the price point has become quite a bit.
On the higher price bands, while there is buyer growth, we are seeing some of the customers actually scaling down the complexity of product they are willing to buy. So it means that if earlier they were open to buying a higher making charge product, they are sliding down a bit, but they are still buying a certain quantum of gold and a certain value. So there is some, some indications there and if I were to answer your question on what are customers telling us in terms of our conversation, they certainly are feeling the pinch and therefore they are looking for solutions both on terms of lightweight jewelry, lower karatage jewelry, as well as probably lower making charge jewelry. So, they still want gold but they’re looking at how they can manage it within their budgets.
Manoj Menon
Understood. Thank you, Ajoy. Just one quick follow up and then I have a second question. So the quick follow up here is if, let’s say, in a hypothetical scenario because end of the day gold is just a commodity. If gold corrects 20%, 30% and probably stays there, I know that it may not last for longer. I’m not taking a commodity view here. In the interim, consumers may have moved from 20 to 18. Does it have some sort of, let’s say, an impact on your medium term absolute revenue situation?
Ajoy Chawla
Actually we would welcome any gold price correction because a lot more customers will come in the market. Evidence of that was seen when the Finance Minister had reduced their duties last year and so many fence sitters kind of just jumped in. So it’s the best situation to be in. It also helps us improve margins actually on various fronts. So actually we would welcome it and any value or ticket size drop being compensated by a jump in number of buyers is a fabulous situation to be, because if we can cultivate them.
Manoj Menon
That’s a fair one, sir. And quickly on the second one. As I understand, the diamond prices, let’s say, in the wholesale market has declined materially over the last few years, whereas in the retail market it is probably flat. Now, I’m thinking from a consumer point of view who let’s say, bought diamond from any jeweler two, three, four years back with let’s say, an explicit or implicit understanding that, I can actually come and exchange it at the market price. Now, is there a situation where consumers are coming and looking for an exchange and realizing that, my diamond prices has not inflated at all where gold and does that have any implication for, let’s say, what he or she is buying today in an exchange? Is he preferring more gold over studded or diamonds rather?
Ajoy Chawla
So one clarification, that there are different behaviors in the solitaire segment and especially the bigger sizes, 1 carat, 2 carat plus and then smaller carat sizes in solitaires and then the smalls. More than 90% of our studded, 95% of our studded business is non-solitaire, which means they are small. Have the prices really come down in wholesale market or in retail? No. In solitaire, there’s a different story. 1 carat plus, 2 carat plus in the wholesale they have come down. But if I were to go back five years ago, if somebody has bought vis-a-vis five years ago, the price has not really — I mean it went up and it’s come down.
So the index, it’s a little difficult to kind of mathematically concluded, because it’s to do with the type of diamond, fancy shaped, big, small, spec, VVS, SI, there are simply too many elements, but I’m just giving an index feel to it. So this is at the wholesale level also and in retail, certainly anybody who’s bought diamonds from us five years back is not going to experience a drop. They may say, okay, it’s not really appreciated much, but somebody who’s bought it two years back may — may think that the price has come down, but actually that is more narrative in the media that he might be reading. Whereas when she comes to the store, she may say, there may be a 5%, 6% impact.
But coming to the question you asked, because of this, let’s say, narrative or otherwise, if this perception exists are people saying, let me stick go to gold. There is a bunch of people who are saying, especially the high carat solitaire buyer and there is a very small number, by the way, in the entire year that we sell to them, that customer has become a little vary of using the solitaire big stone as a means of investment and therefore, because the price volatility is saying, let’s see where this settles and let’s see if it starts forming up. So they are holding back.
Are these guys going and buying gold? Some of them may be doing so, I don’t have exact data to correlate, but we do know that some of our high lifetime value customers are all feeling gold is certainly the flavor at this point in time and they have no hesitation in buying gold, whereas they may have some hesitation in buying these solitaires. On studded small stones, I don’t think this story is at all playing out the way, we might be imagining and that is more than 90% of our studded.
So different stories sitting here and different kinds of segments and very, we are also leveraging that and by the way, on the solidaire side, smaller stone sizes, we are seeing a whopping increase in buyers and at overall level, studded buyers is outpacing gold buyers, whether solitaire or otherwise, since not now but the last two quarters and it carries on into this month, April month also, it has been that way. So actually at a buyer level, the story is different from the value level that you are seeing. I don’t know, if I have answered you or confused you, but I’m just giving you three, four different insights.
Manoj Menon
I love to listen to the transcript once again, sir. Thank you and good luck.
Operator
Thank you. The next question is from the line of Avi from Macquarie. Please go ahead.
Avi Mehta
Yeah. Hi, team. Just wanted to spend some time on the jewelry margin. Could you please help clarify this overhead management which you carried out this quarter and how sustainable are these gains? Essentially, the context is that despite a weakening mix, you’ve seen almost 12% standalone EBITDA margin and hence is there an upside possibility to that 11% to 11.5% range that you are indicating in prior to this quarter?
Ashok Sonthalia
We — Ashok here. Actually 11.9%, if you think about domestic jewelry business, it’s kind of 11.6%. You can see in our disclosure, that there has been higher primary for international business and they had some positive impact on the reported numbers. But 11.6% nevertheless had element of — small element of operating leverage as well as some hedging gains hitting it. Whenever robust growth happens, some element of operating leverage coming in business is quite normal and which has happened. So it is not that extraordinary effort to squeeze out the normal cost which we need to invest for the growth of the jewelry business, it is just the scale going up for last two, three quarters has given that benefit. Of course, we have been mindful of what cost we are incurring and how we are incurring, but it is combination of operating leverage as well as some hedging gain which you are seeing that, studded ratio is slightly lower but still we are able to deliver.
As far as coming to 11% to 11.5% margin guidance, I think that stays. We are not guiding you for any upside. Considering the uncertainty of gold prices and many, many uncertainties for future, 11% to 11.5% seems to be more reasonable to think about.
Avi Mehta
Got it, sir. Fairly clear. And the second and last bit is on the demand side. Now, you did clearly allude towards the consumer behavior asking for more value, more making charge and we’ve been able to deliver that in this quarter as well, it seems like. Now if I were to kind of look at this going forward for FY26, how would you parse the growth? Are you in a scenario where, the last year is giving you confidence of upwards of 15%? If you could give some sense on how should we look at the next year. That’s all from my side.
Ajoy Chawla
Sorry, what is 15%?
Avi Mehta
Sir, I meant sales growth, Sorry, generally sales growth. When I say, how should you — if you were to look at your earlier mid-year targets and what kind of is expected for the next few years, on a simple average basis, it does implied upwards of 15% to reach that 2.2, 2.5 times and that’s where I was.
Ajoy Chawla
Okay. So, that’s the derived figure. Yeah. Yeah. Okay. So I think demand outlook has been driven especially in this last quarter and even to an extent in quarter three by the average ticket size growth, which has certainly been influenced by the increase in gold prices and therefore buyer sentiment and buyer growth have been rather muted. Now, how this will play out as we go forward, very difficult. But certainly from our end, we continue to target high double-digit growths. Whether it comes in value, whether it comes out of buyer or ticket size or a combination of the two, that is a very quarter-to-quarter fluctuating scenario, very difficult to predict. But certainly we are targeting and we are preparing and aiming for these high double-digit growths. What turns out of course depends on the situation.
Avi Mehta
But Ajoy, do you see international at risk because of this tariff talk et cetera or is that not anything to get so much about?
Ajoy Chawla
Diny will try and answer that for you.
Kuruvilla Markose
Hi, this is Diny here. Tariffs as of the way we are seeing things now in the US market, it’s not really cost any significant thing, but that we’ve not taken any price increases as yet. We’re waiting, we will watch how the whole situation unfolds and then basis that depending on what competition also does, it’s quite likely that if tariffs go up, then we will take price increases. That — how that’s going to play out, will it mute demand at this point in time, the view would be that it doesn’t look likely and it also looks like between India and the US, the bilateral trade agreement is progressing well and it looks that we will reach some kind of an agreement on that. I mean, Trump has just announced that, he struck a deal with UK first and since India has already done a similar deal with UK, India and the US doing a deal looks quite likely.
Avi Mehta
Got it. Fairly clear. I’ll come back in the queue for the other questions. Thank you.
Operator
Thank you. The next question is from the line of Videesha Sheth from Ambit Capital. Please go ahead.
Videesha Sheth
Hi. Good evening team. Thank you for the opportunity and congrats on the numbers. My first question was on the competitive landscape. Last quarter you mentioned, that the element or the competition element on the gold pricing had stabilized, but on making charges it was still elevated. So given the inflation that we’ve seen in the fourth quarter, can you comment on how the landscape has changed? That was my first question.
Ajoy Chawla
Yeah. I think it is broadly in the same zone as what I said last time. Competitive intensity continues to be very high, price warriors are there. On gold rates, we have not seen that much activity. Making charge continues to be it fluctuates, but by and large I would say, it remains what I said last time.
Videesha Sheth
Got it. And the second question was on the studded jewelry part of things. As a category leader, how would you think about revising consumption in this segment going forward? While the DBS partnership is a step in that direction, but any other — have you identified any additional initiatives on this front, that could stimulate demand?
Ajoy Chawla
Actually on studded, as I said, there are two, three segments. You think of it as solidares, within that there is lower sizes and bigger sizes. Lower sizes, the demand is already revived and we’ve in fact aggressively pushed forth on a using our distribution network as well as our ability to source and supply so that we are seeing very good growth. So that’s been one lever we pivoted in a way from larger carat sizes to smaller ones and it’s showing up in numbers very well.
In terms of jewelry, studded jewelry, if I think of our portfolio across Tanishq, Carat Lane, Mia and if you were to look at it in the sub INR50,000 sub INR1 lakh range, I think we’ve still been able to clock in maybe early double-digit growth in that area, thanks to the portfolio play and therefore pushing that portfolio play including network expansion across Carat Lane, Mia and distribution depth even in the Tanishq stores, I think that is the second lever. Third lever that we are really looking at is reducing the price points for customers by looking at lower karatage. So if people have been used to buying 18 carat studded, they are also now beginning to get comfortable with 14 and in case of Carat Lane, they’ve also introduced 9 carat.
So these are three, four different levers. But nevertheless desire, creation and excitement by each brand continues to be at the heart of it all, because finally it’s an adornment product and she’s wearing it to experience an emotion. So I think that’s — that continues to be a very big lever.
Videesha Sheth
Understood, that was helpful. Just a small follow up to this, on the Carat Lane and you launching the 9 carat jewelry under nine carat as well. But given it’s not hallmarked in nature, how do you expect consumers to react?
Saumen Bhaumik
Hi. This is Saumen. We launched this 9 carat jewelry sometimes around Valentine and we saw good response. This is not hallmark, we are not claiming it is hallmark, but it is stated as 9 carat diamond jewelry, it is sold as 9 carat diamond jewelry, but it is also quite likely that 9 carat is going to come under, hallmarking very very soon. It is very advanced stage. So I think that will settle down very soon and otherwise, we saw decent response and with the gold rate increase I think it’s an alternate option for customers who are also looking at adornment other than just investment.
Videesha Sheth
Got it. Understood. Thank you.
Operator
Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead.
Arnab Mitra
Yeah. Hi, team and congratulations on a great performance across all the businesses. My question again was on studded and where I’m coming from is, when we anecdotally speak to a lot of people who historically have owned diamond, these are rich families. That segment seems to almost suggest anecdotally that we are not going to buy diamond or we are going to buy much lesser of diamonds going ahead, but your growth rates, buyer growths are all very good. So are we like dealing with completely different sets of consumers here? Are you getting the growth from people who are buying diamond for the first time in your view? Just trying to understand, this disconnect that a lot of people feel between when you speak to anecdotally and versus actual numbers which show good growth for you.
Ajoy Chawla
Yeah. Actually there are many segments and frankly, some of us anecdotally speak to only some other people like us and they may be all, already diamond buyers and fairly well off and very evolved diamond buyers. So, and again, if you happen to be speaking to the type who is seeking solitaires as an investment buyer, then that’s another sub segment within them.
So I would say, that there are simply too many different segments and the segment whom you are referring to, the ones who buy diamonds for investment, is a rather, rather small percentage of the total studded buyers existing or even if I think of the penetration of, I mean amongst new, of course new studded buyers, there’s a vast ocean out there. So I’m not even saying, certainly there are new people coming in, but even existing studded segment, this is a rather small percentage of people that we may be anecdotally receiving such pieces of information from and even they might be fluctuating in their behavior, when it comes to adornment, they may have no qualms in buying smaller stones, et cetera and when it comes to investment they may be having a different point of view.
Arnab Mitra
Right. So from the data that you gave, which is buyer growth being pretty strong, that — the fact that the value growth is not keeping up is purely a function of the fact that gold is a smaller component of the jewelry and therefore the unit price hasn’t gone up as much as gold.
Ajoy Chawla
No, I think — no, no. See buyer growth is higher in studded than gold, but gold has been rather, rather dull because of the sub INR50,000 segment. Okay, now that’s the only piece here. At the high value and is there a customer for studded jewelry? Certainly, value growth will come. It’s a mix of both, I don’t think, I cannot conclude that growth will come only in the lower end in studded and higher end in gold, nothing like that. There is opportunity both is in fact India is minimizing and there are a lot more Indians who are happy to spend on high value studded as well.
So this is not a commentary of this piece at all. There is opportunity in both. I was just making the point. Even in the sub INR1 lakh studded, we are seeing because of portfolio play, we are seeing a early double-digit growth which is not a commentary on what is happening on the higher value student.
Arnab Mitra
Got it, got it. And my last question was just on this — we had obviously a lot of news around lease costs going up during the quarter due to tariff speculation. So has it impacted this quarter in any way for you and is there any lingering impact going forward on that? That would be my last question.
Ashok Sonthalia
You see like of course you are right, that as a knee jerk reaction to gold on lease rate has gone up almost doubled and more than doubled and it is settling down now. But more than that, even gold price, gold rate also impact our financing cost because now the same quantity of GOL is far more expensive 30%, 40% and I have to pay interest now on that 30%, 40%. So just the rate increase had a small impact, but overall gold price increase had a larger impact for the full year as far as GOL interest cost is concerned.
But the good news is that after that GOL rates have been settling down and I think they are now about 75, 80 basis point above the historical number and we will see how, how does they play out in FY26.
Arnab Mitra
Okay. Thanks so much. That’s it for my side. All the best.
Operator
Thank you. The next question is from the line of Kunal Vora from BNP Pariba. Please go ahead.
Kunal Vora
Yeah. Just one question. I hear from the market that the wholesale price of LGD have again crashed in recent months. Why are you picking up about the state of LGD retailers? And is LGD coming up in your conversations? Also if you can update us on your latest views on entering the LGD space.
Ajoy Chawla
So, I can share with you what I have picked up about the retail and wholesale prices of LGD. Most certainly the wholesale price was anyway coming down continuously and it continues to drop and I think that will not stop, because even automation will happen and many other tech developments and productivity developments will push cost down like any tech product. But interestingly, even on the retail side, many of the players were retailing LGD products at roughly INR60,000 to INR50,000 a carat. Now this is to be taken with a pinch of salt, because the carrot age is not exactly straightforward. That has now come down to INR30,000 for many players, barring one or two players who are continuing to retail it at INR60,000 and there are new players coming in all the time.
So our estimate is that, the market will continue to drop the retail price of LGD per carat and that will make it much, much more affordable and I’m not sure, how the unit economics is going to play out for a bunch of these players unless we see a large number of totally new buyers coming into studded, which of course if it happens is great news for the industry overall.
So it is a choppy situation, but nevertheless, even at INR30,000 a carat retail price, the markups are quite healthy. So I suspect, there will be more price warriors who may come. But this is just to give you an overall narrative and where this will end, very difficult to predict.
Kunal Vora
And what about your thoughts on entering this phase, the drop in prices, does it make it completely unviable or would you give it a thought at some stage?
Ajoy Chawla
We’ll keep thinking about it is the best I can say, because the stability has not been reached and it’s not that everybody’s coming and asking for LGD’s, et cetera and many players are jumping in anyway. So I think it’s too premature to comment.
Kunal Vora
Okay, thanks. That’s it from me.
Operator
Thank you. The next question is from the line of Percy Pathanki from IIFL Securities. Please go ahead.
Percy Pathanki
Hi, sir. Just wanted some clarity on this hedging gain. So my understanding was the purpose that we hedge is that the EBIT margins of the business remain unaffected by any volatility in the gold price, but you are saying that the reason why margins are higher is because of some hedging gains and the second question related to this is that, when the gold price is going up, we should actually have a hedging loss because we are recovering higher from the consumer and to offset that inventory gain, actually we are entering into a future contract, so that contract should give us a hedging loss. So can you just address these two issues –gaps in my understanding please?
Ashok Sonthalia
Gold is volatile at this point of time and we have, if I can use the word contango gain, when you are doing forwards in gold thing, when you do the future, there is a different economics, when you do the forwards with the gold on international exchanges and there is a different economics and we have been able to do some of that transactions in quarter four which gives us contango gain and that is what the region is and it’s not so, because every time it keeps moving and there are thousands of transactions which get squared up on everyday basis from our side.
So overall basis, when I compare that we have a small hedging gain, we are not and your idea is correct, when we move from cash flow to fair value, if you remember, idea is to not disturb P&L through hedging actions but we have contango gains because we are able to do forward transaction on international exchange.
Percy Pathanki
Understood, sir, understood. So this contango gain is a one-time permanent gain or will it reverse next quarter?
Ashok Sonthalia
No. So there is a part which is a timing wise that the period of forward will kind of keep accruing and then there could be a part which can reverse also depending on the gold price.
Percy Pathanki
Okay, so part permanent and part phasing, is that how I should take it?
Ashok Sonthalia
Yeah, yeah, yeah.
Percy Pathanki
Understood. So second question is on the outlook for jewelry growth next year. So see, while the gold price inflation has definitely dampened the buying sentiment, number of buyers are coming lower, et cetera, but still there is some amount of inflation which is sort of at least partially benefiting us, because the gold price has, let’s say doubled in the last three to four years almost. So the person will not cut down his volume by half. He might cut down his volume, but there is still a net-net gain in the overall outlay per customer and that has benefited and you have close to about 25% kind of topline growth this quarter. So my question is that, if we assume that the gold price remains where it is currently, then should we expect this 25% kind of topline growth to continue for the next two to four quarters?
Ajoy Chawla
So Percy, this is Ajoy here. The 23% or 24% growth that you’re seeing talked about, I’m not sure it’s 25% maybe. Domestic primary sales growth reported NSV is showing up as 23 point something percent, but that percentage is because there was also some amount of upstocking that happened in the year end because of an early Akshaya Tritiya, right? So if I go down to the secondary growth, actually the retail growth, it is around 20%. So I just wanted to correct you there.
Certainly, what you said is true. When gold prices are going up sequentially, there is a benefit, there is a value growth and therefore there is a ticket size growth that we see and in our mind, as I mentioned in an earlier question, we are certainly planning and targeting and also hoping for a healthy double-digit growth either driven by ticket size or by buyer or by both.
So the outlook for jewelry continues to be positive. If I may pick up one or two other threads, while we’ve spoken a little bit about the headwinds on price of gold, see this year there is a very good wedding season in quarter one. Last year there was elections in quarter one and there were no wedding dates. Infrastructure spending by government has continued and will continue for the first four, five months, which was not there last year. There is also the largest from the Finance Ministry on the IT for a large number of people in the country. Maybe not directly, but at least the secondary and tertiary second order, third order benefits of that will start flowing into the economy. There is also a lot of liquidity being injected.
So a lot of positive tailwinds are there despite the uncertainties that exist in the market. So our outlook for jewelry, not just for the year but for the next few years continues to be bullish and we are committed to driving healthy double-digit growth year-on-year.
Percy Pathanki
Got it. Sir, if I might just push this a little bit. Can we say that, the growth rate trajectory has possibly at least in the next couple of years moved up from a high teens to slightly higher than 20%?
Ajoy Chawla
I can’t say that, because that would be getting ahead of myself. We happen to have delivered a 20% growth in one quarter. I, we have to be a little bit more careful in making the statements. I would still say, it is healthy double-digit growth, whether it is going to be 155 or 20% or something in between the two. We would still leave it at that. Between 15% to 20% is a fairly good rate, I would say.
Percy Pathanki
Okay, sir, okay, that’s very helpful. Thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Vishal Gutka from ASK Investment Managers. Please go ahead.
Vishal Gutka
Yeah. I think congrats on a good set of numbers. So I have one question on the franchisees format. So what my channel ticket is suggesting that, you are piloting a format where capital by franchisee and you’ll be running the store. I think, Kalyan runs similar kind of store. Is this true and if this through then historically capital has been never been a challenge for us. Just wanted to get your comments on this.
Ajoy Chawla
So we are [Technical Issues] of course there is — we are always learning because we respect competition and what they do and there’s always something to learn from them. So we study what they are doing and what a few others have done also in different ways. The second piece is, we have also many associates and partners who may not have the succession planning in their own firms or in their family and many of them have been with us for a long time.
So we also start thinking about how do we kind of ensure some continuity and yet, they have an ownership because they have a relationship in that neighborhood, in that catchment. There’s a lot of respect and we also have a lot of care, you know, because they’ve been with us for 25, 30 years. So that’s another factor that we are keeping in mind. And therefore yes, we will continue to experiment with formats. It’s not so much from capital scarcity, but also from the point of view of is there some merit and advantage in doing so? Because increasingly the business is more complex also and many franchisees may not have that level of organization depth to be able to manage some of these things. So we are also looking at it from that perspective.
But having said that, as an organization and as a brand, we are not wanting to run too many stores on our own, especially not beyond the top 10, 12 cities in the country because it is more complex for us to manage, whereas our presence is across 300 odd towns. So we will still be a largely franchised network with limited cities where we will do and that too only stores where we have large turnovers at stake.
Vishal Gutka
Got it. Got it. So, another one bookkeeping question. What is the store opening guidance for Tanishq for FY26 domestic business? How many stores we are planning to open?
Ajoy Chawla
40 to 50 stores. But more importantly, we are also looking at 50 to 60 stores of existing stores being either renovated or relocated or adding additional space. When I say additional space, it’s like adding an entire store. So a transformation program is underway in the last two, three years and it will continue in the next 18 months and the headroom on that front is rather more high compared to even the headroom on the network. While we’ll continue to grow network into new catchments and cities, even this is a big piece of our growth.
Vishal Gutka
Got it, got. And the 50 dictionary, most of them will be L1 format, right for you?
Ajoy Chawla
No, no, no, no, no. Most of the, in fact new ones are likely to be franchised, the L2 or L3. Very few will be L1.
Vishal Gutka
No, no, sir, I’m talking about the renovation part. You told the 52 they are planning to renovate — refurbished.
Ajoy Chawla
No, no, no. Those are also mix L1, L2, L3, all, all formats. We have in fact transform 160 odd stores in the last two years which are a mix of franchise and company.
Vishal Gutka
Great, sir. Wishing you all the best for future quarters. Thank you.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Devanshu Bansal
Hi. Congratulations on a great performance and thanks for taking my question. Sir, from a balance sheet perspective, there has been an increase in our working capital and that has sort of led to some fall in our return ratios also. This is obviously due to increasing gold price and related fall in volume consumption. How do you plan to deal with this, as gold prices are continuing to increase. So, there is a significant working capital increase. So how do you plan to deal with this?
Ashok Sonthalia
Yeah, so largely you are right. This is all on account of gold price increase and of course some investment of inventory is done in some of the catchment. If gold price continue to rise like this, while we have some levers of increasing our GOL level, et cetera, et cetera but it would certainly require some more capital investment from our side and for which our balance sheet can be leveraged, it is capable but idea would be then to leverage UL more and it is very unpredictable, what would be the gold price trajectory going forward? We will wait, watch and see and kind of keep responding to the evolving situation.
But yes, you are right. In the current context, a little bit strain on working capital has come in and the year end number which you see, Ajoy had spoken about Akshaya Tritiya being early, there has been upstocking towards end of March. So the balance sheet number which you see is a point number. That’s not the story for the full year.
Devanshu Bansal
Understood. Ashok, also, if you are open to sort of call out the exact quantum of the hedging gain in this quarter, you are calling that out.
Ashok Sonthalia
No, it’s not that significant that we should call it out. It’s not that significant, but it is one, one small factor in that marginal EBIT margin which you see, so nothing so significant that we start calling it out.
Devanshu Bansal
Understood. So last question from my end. The overall jewelry UCP is 20%. Can you call out the secondary growth in studded sales? So reported is 12%, what is secondary growth in studied sales for Q4?
Ajoy Chawla
Yeah, I’ll tell you. Studded growth, I’ll tell you, one minute. Yeah, it’s around — around 12%, I think 10%, 12%. 11 or 12%. I don’t have the exact figure here with me. Almost similar to what has.
Devanshu Bansal
Almost similar. Okay, okay, fair enough. Thanks for taking.
Operator
Thank you. The next question is from the line of Jai Doshi from Kotak. Please go ahead.
Jai Doshi
Hi. Thanks for the opportunity. My question is on industry practice of, exchange and cash back in case of studded jewelry. Now, in a hypothetical scenario if, the consumer behavior changes and as, consumers start sort of, exchanging more studded jewelry in future and buy gold jewelry or, basically take cash back. So that could have a significant impact on profitability for overall industry. So I was just wondering, is this something that comes up, in Board discussions or industry association discussions as a industry leader, how comfortable are you with this policy that you have today where, basically anyone who has potentially bought any studded from you in the past 10, 15 years can always come back and give it to you at 10% lower price or 15% lower price versus the current pricing and that’s because, partly there’s a big gap between your procurement costs for diamond and your retail pricing for diamond. So I want to understand from a risk management perspective, is this something which you think about?
C.K. Venkataraman
Yeah, Venkat here. Just some perspectives. In India, the category of jewelry is so much about store of value and in a way the exchange policies reflect that customer need and therefore even the lower — relatively lower gross margins in this industry in India, because of the store of value concept, because customers don’t want to lose when they exchange. I’m talking in general, I’ll come to your the diamond jewelry point in a minute.
So that depresses the markup potential in India versus, let’s say, in the US it’s not a store of value, it’s an accessory. The markups are like other accessories. Now in a way related to the store of value concept, because also of the connections to culture, tradition, feeling of wealth, people don’t like to sell jewelry, they exchange jewelry, but unless there is a calamity in the family, they don’t sell their jewelry. And it’s in a way related to the store of value and of course also related to the dhan aspect of jewelry.
And therefore, like we have had this policy for, you can exchange gold as well as diamond jewelry for cash. That policy has been there for more than two decades, but the incidence is really, really in the decimals, in the small decimals because of this. So unless generational views on the subject changes, which may be 20 years, 30 years, 40 years, and that’s a very long time for us to talk about here, this is not a — because it has not materialized in its actual incidence on this and even what you’re asking, which is people coming in with diamond jewelry, exchanging it for gold, even that incidence is very, very low.
Jai Doshi
Understood. So basically exchange proportion is broadly similar and that has not changed whether it is for gold or diamond in the last year.
C.K. Venkataraman
Gold to diamond, yes, because diamond is an upgrade product for those who never had diamonds.
Ajoy Chawla
Yeah. And, just to add a little bit, I have personally seen many customers be extremely delighted when they come back after several years and say, wow, my diamonds, my gold, everything is appreciated. That feel good factor is so much that she is very happy to in fact upgrade and add a lot more and therefore the upsell we see on exchanges out of that goodwill and in fact, the statement they make is only a Tata company like this would give me such appreciation I’m seeing. So actually we are, we see a lot of positivity and the risk factor hypothetically does exist, but it hasn’t yet played out like this so far and we hope it isn’t.
Jai Doshi
Very helpful, very clear. Second question is in FY25 your standalone jewelry growth was 21% and EBIT growth was 12%. Now with, you maintaining your EBIT margin guidance and ballpark expecting growth to be in 15%, 20%. Do you think FY26 even notwithstanding the volatility in gold we have seen and the mix changes that we continue to see, you think that that gap will now narrow? I mean your EBIT growth also will be ballpark in that range, 15% to 20% or maybe a couple of percent points short of topline growth.
Ashok Sonthalia
So, if we are going to maintain EBIT margin then it has to be, otherwise there is no way we will able to maintain EBIT margin.
Jai Doshi
Understood.
Ashok Sonthalia
To that extent, that’s the expectation but market is very, very and while this is the current view and if circumstances change dramatically then we may have to get back to you guys talking about it. But right now whatever we see with that we think yes, we should be able to grow at the similar pace.
Ajoy Chawla
I’ll just add one more piece. Our priority to continue to grow topline and acquire customers is the highest and sometimes we may be willing to invest some of that margin into growth and that’s been the outlook and that’s also been the guidance from our Board and everybody. So margins may sometimes come down if the competitive situation or the consumer sentiment is adverse.
Jai Doshi
Sure. Thank you so much and congratulations Ajoy on your appointment Assembly.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.
Harit Kapoor
Yeah. Hi, good evening. I also had a question on competition. So, in an environment of — the two aspects to it, in an environment of sharp increase in gold prices, are you seeing that, we have not seen a pickup from say regional private, smaller guys who probably would be sitting on higher inventory gains on schemes et cetera has that intensity not accelerated. And the second part to that was, you explained gold metal loan quite well. I just wanted to understand, is the availability of the gold metal loan and the fact that it is stretched because of the higher gold price is also a source of competitive advantage for you, because you’re titan and you can kind of get it at a lower rate as well as have probably infinite kind of working capital. Just could you shed some light on these two aspects? Thanks.
Ajoy Chawla
Yeah. So gold on loan, your observations are right. We are in best position in the industry as far as India is concerned to leverage gold on loan, get the best rate and substantial amount of limit without any concern from the banks compared to other where they would kind of beyond a point will not like to extend. So that gives us an competitive advantage and ability to invest in inventory at higher gold prices.
The first question was on the demand side, competitive intensity. Yes, those who don’t hedge do sit on inventory gains and they are willing to let go of margin and they play it out in the form of heavy discounting on making charges and it is not just restricted to small players, it is also even larger players. Not every large player is hedging 100%. So it does play out. So yeah, but, we also then respond in whichever way is appropriate for that market and therefore it’s a complex constant, gain share, invest in providing value to the customer in some form, brand, customer experience, product design, making charges everything comes together as a value proposition.
Harit Kapoor
Sir, because my question is just why again, this question was because, the pace of gold rise has been so sharp this time. Maybe that there could be more investment by large private, small private regionals, but you’re saying it’s a manageable scenario right now?
Ajoy Chawla
Yeah, I mean I think it’s not new now. I think it’s, if you ask me, last 12 to 15 months has continued to play like that and we just got used to this.
Harit Kapoor
Got it. And the second part was on couple of data points on the World Gold Council data. One was it said that exchange as a percentage has not dramatically gone up in spite of prices going up so sharply, which means that the new buyer growth might have been a little bit more surprising should have probably fallen off a little bit more in the industry. And the second was on the fact that the overall demand growth in value terms is 3%. So on these two points you are growing far, far faster as you have been historically. Is that, has the shift kind of further accelerating in this rising gold price environment towards organized players? And are you surprised that you’re still seeing buyer growth in spite of this dramatic increase in gold price in exchange has not dramatically gone up. Those are my questions. Thanks.
Ajoy Chawla
No. So exchange has gone up somewhat. If I look at this quarter four, the contribution of exchange has gone up by a couple of percentage points, that’s one. New buyer growth, especially in gold has flagged off and certainly as I said in the lower price bands. So it’s not that we are blazing away to new buyer growth in gold, no. In fact quarter three, quarter four, it has been very muted and therefore higher growth in ticket size which usually comes from higher repeat. So the skew between repeat and new has been there.
Some of the overall new buyer growth percentage figures you’re seeing is to do with the overall portfolio, because Mia has opened a lot of stores, et cetera and that is giving us some benefit in the new buyer growth. But if I dissect it by brand and go into by store and channel, there is and by category, there is a similar point as what World Gold Council has said, but exchange has gone up certainly in contribution by a couple of percentage points in quarter four.
Harit Kapoor
Got it. Thank you. Wish you all the best.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Tejas Shah from Avendus Park. Please go ahead.
Tejas Shah
Hi, team. Thanks for the opportunity and congrats on good set of numbers. So just one question to the team. So you mentioned, that our weight and watch balance on LGD continues, but just to clarify, is the focus on assessing long term customer relevance of this offering or are we still evaluating the economic viability of the business model here?
Ajoy Chawla
I think it’s both. The first one is certainly very important, what do customers think? And customers are not that clear. They are pretty confused and many others, there are people who would like to experiment. There are people who are getting a little worried about the prices and there are many new customers who come into diamond jewelry and want the authentic piece. They are not so confident. So right now I would say, in the balance there are many more people who are already diamond buyers who may be buying LGDs and many new to the category are still a little hesitant.
And I think the store of value that Venkat talks about pretty much plays up high in their mind. But definitely the customer piece is more important. Economic piece we can figure out once we know, what the customer really wants and how it plays out. Economic piece is how we manage the business.
Tejas Shah
Okay. Is this read through same across our engagement with customers here and abroad or it changes because the store of value understanding also changes?
C.K. Venkataraman
Sorry, what is the question?
Avi Mehta
Is this read through on customers? Is it same across in India and abroad or abroad because the store of value dimension is different? Over there, it is slightly different than how we are reading customer in India on LGD?
C.K. Venkataraman
At the moment, and Diny can add — at the moment, our focus in the US the most evolved market in in our overall situation, Indians are more Indian in the US than in India and the store of value is quite, quite pronounced there as well.
Tejas Shah
Sure. And lastly, are there any reasonable nuance that we would like to call out in this quarter’s number in terms of north, south or any read through there on demand?
Ajoy Chawla
I think east and south continue to lead the growth and west and north have been a little more sluggish and within that, again, west may be a little bit more than north has been sluggish, but that is, I think this, that seems to have been the trend of the current financial year that just ended the 31st of March.
Tejas Shah
Okay. Thanks. Thanks a lot. Thanks and all the best for coming quarters.
Ajoy Chawla
Thank you.
Operator
Thank you. The next question is from the line of Moksh Ranka from Aurum Capital. Please go ahead [Indecipherable] Thank you. The next question is from the line of Vivek M from Jefferies. Please go ahead.
Vivek M
Hi, team. Good evening. Three questions from me. First on LGD again, one more question, on the LGD side is your worry more about, given you are the market leader in jewelry, you do not want to, let’s say create or create is the wrong word, I think expand the market because we have seen someone like, let’s say a retailer like trent, which has also entered into this. So is it more about, you don’t want to in a way cannibalize your own business by existing diamond business by, creating more awareness? Is that the hesitation — reason for hesitation?
Ajoy Chawla
See, we are trying to understand what the customer wants and frankly, that is what guides us and how is the customer thinking about it and we are still seeing customers are a little unsure. Trent has got into it has purely an independent decision and it’s not something that, that is not playing in our mind at all. We need to be clear, what is a value proposition we need to offer to the customer and at the next level, we need to be clear what will be the source of differentiation and continued competitive advantage in a category which could get very easily commoditized because of price.
So these are important considerations for us and I don’t know whether you should call this hesitation or examining and reflecting as to what is the right thing to do.
Vivek M
Okay. And is your internal view also that, that LGD will have no impact on, let’s say natural diamonds or where you are on that bit?
Ajoy Chawla
Very difficult to answer that question, because the how it plays out will depend on whether new customers will — will the market expand? That’s the big question and if the market expands, expands and penetration of diamonds, which is as low as 15% in our country goes up even by a few percentage points, it can bring many new customers and it can be a win-win. In the short run, there may be a lot of ups and downs. The dust will settle somewhere. Very difficult to predict. Some pluses and minuses can happen, but I think we need to look at it over a slightly longer period and see where the dust will settle.
Vivek M
Got it. Got it. My second question is, there are obviously at least globally, whatever and I have, admittedly very limited understanding on this, but I hear that part of the reason why natural diamond prices actually went down were because of LGD. But what we — what, there was a recent media article which said that natural diamond prices actually moved up 10%. I think this was in the month of March or April, end of March, I think. Do you have any insights as to what drove this change and is that something more, I don’t know, secular is the right word or not, but I would still use that. So is there something which is happening which is why natural diamond prices moved up.
Ajoy Chawla
Again, I think this reflects the wholesale prices of roughs and again on the higher karatage sector. It is probably on the back of Chinese demand, perhaps coming back. I don’t have more insights on whether it will go further up or that was the bottom and from here on it’s up, difficult. Only, the rough suppliers and what happens in international markets will really determine the price on that. Very difficult, I don’t have an answer to your question. Sorry.
Vivek M
No, I appreciate. Thank you for that. My last question is on the sequential basis, we have seen jewelry margins actually moving up and Ajoy clarified that there is no major, hedging impact because of which the margins have moved up and are channel checks actually, indicated in the last few months, given how gold prices moved up, especially in the fourth quarter fiscal, there was a lot of, let’s say discounts or making charges, promotions given by regional players, local players. Why is it that, this has not shown up in your numbers? What am I getting wrong over here?
Ajoy Chawla
See, the gross margins have been impacted because of the product mix, no question. I think Ashok did share fair amount of let’s say, answers observations on the fact that there’s a mix of operating leverage and some hedging gains on tango, et cetera. So those pieces have probably, played out in the — not probably have played out in the EBIT margin percentages that you’re seeing. Gross margins have certainly got impacted on two counts. One is product mix, the other is the price of gold itself, playing a role in the studded margin line item level as well, we’ve explained that earlier before when prices of gold go up relative to diamonds, there is an impact on the gross margin for the studded jewelry line item itself. So combination of these two has impacted gross margins.
Vivek M
I see.
Ajoy Chawla
Sorry and sequential piece that my colleague here reminds me is also because the studded ratio in Q4 versus Q3 is different. Q3 is a rather more gold season. In Q4, we have a lot more diamonds. So that could be another factor.
Vivek M
Right, right. I mean, when I said sequentially, I mean I was looking at all the rolling four quarters, for example. The only thing was, what Ashok mentioned was there is no big impact of any one-off on the EBIT side except operating leverage, right? So in that context, basically the, the discounting or whatever we saw on the ground, it was minuscule compared to or you did not face that, that pressure as much except for a slight impact on gross margins which got offset at the, let’s say, due to operating leverage. Is that a fair understanding?
Ashok Sonthalia
Yeah, I think you are right.
Vivek M
Got it, got it. Thank you very much. Very useful.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now hand the conference over to Mr. Venkataraman for closing comments.
C.K. Venkataraman
Thank you very much for all those piercing questions and encouragement as always. See you in the next quarter and good night.
Operator
Thank you on behalf of Titan Company Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.