Jul 24, 2009
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Titan may report marginal rise in first quarter net

Jul 24, 2009

MUMBAI (Reuters) - Watch and jewellery retailer Titan Industries Ltd will report a marginal growth in first-quarter profit on slow sales amid an economic slowdown, analysts said.

Photo: REUTERS/Jayanta Dey

Profit may rise 2.42 percent to to 330 million rupees while revenues may increase 11.41 percent to 9.02 billion rupees, a Reuters poll of brokerages showed.

"We expect low double-digit sales growth in the watch business," brokerage Motilal Oswal said in a report, adding jewellery sales would grow between 10 percent and 20 percent.

Titan Industries has five watch brands, two jewellery retail chains -- Tanishq and Goldplus -- and an eyewear chain Titan Eye+. The company sells watches under its premium brand Titan and economy brand Sonata.

The modest sales growth will be driven by a strong increase in gold prices and stable growth in watches, brokerage Macquarie said in a report.

"We expect watch sales to be flat during the quarter and jewellery SBU (strategic business units) sales to grow just 8 percent y-o-y primarily driven by 20 percent rise in gold prices," CLSA Asia Pacific Markets added.

However, the Bangalore-based retailer is likely to see a marginal dip in operating profit margins due to higher contributions from its jewellery segments, an analyst from a local brokerage told Reuters.

"Over 70 percent of Titan's sales come from the jewellery segment which has lower margins compared to watches. This may put pressure on its bottomline," the analyst said.

"It will be a muted quarter for them due to the slowdown in consumer spends," he added.

"Improvement in consumer sentiment and stability in gold prices holds the key to volume growth in the coming quarters," the report by Motilal Oswal said.

Titan is scheduled to report quarterly results on July 27.

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