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    Rakesh Jhunjhunwala's biggest bet beats Covid blues, reports near normalcy in Q2

    Synopsis

    Titan, which runs jewellery brand Tanishq, said walk-ins have been improving and conversion rates and average ticket sizes have been higher than same period last year.

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    As of Wednesday, there were two 'buy', nine 'outperform' and 11 'hold' calls on the stock in the publicly available Reuters Eikon database.

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    NEW DELHI: Rakesh Jhunjunwala's biggest stock bet, Titan Company, came out with a business update early Wednesday morning, suggesting that September quarter sales of the key jewellery division stood at 98 per cent of total sales for the year-ago period. This excluded the Rs 390 crore worth of excess gold inventory sale during the quarter, Titan said on Wednesday.

    The Tata Group firm said sales were decent, especially in September, despite the inauspicious period of Shradh. The company sees scope for further improvement in consumer sentiment, as the festival season commences in about 15 days.

    Titan, which runs jewellery brand Tanishq, said walk-ins have been improving and conversion rates and average ticket sizes have been higher than same period last year. The company's return to normalcy on the business front has been progressing well, as phase-wise lifting of restrictions is nearing completion, Titan said.

    Titan, which also sells watches and eyewear products, is scheduled to announce its quarterly earnings on October 28.

    "There has been greater acceptance of the new normal among the consumers and they have been getting back to many of their routine activities, leading to a growth in walk-ins and time spent in stores. The company is now gearing up to gain from the forthcoming festive season, which is expected to further lift the mood of consumers," the company informed the stock exchanges.

    The company said opening of malls has helped mall stores, but footfalls are still relatively low over there. As sales revive at a healthy pace, network expansion has also resumed, Titan said. The jewellery maker said the recovery rate in metros that have got impacted the most by the pandemic has been improving gradually.

    "Non-metros seem to have recovered substantially, and many cities have actually recorded growth compared with last year. The quarter, like last year, had a studded activation which saw a decent response, but the studded ratio is yet to recover to previous year's levels. Sales of gold coins have been high, reflecting the customer's preference to invest in gold as an asset class. The wedding jewellery segment did particularly well during the quarter," Titan said, adding that sale of the excess raw gold inventory helped the firm improve cash flow significantly.

    Ace investor Rakesh Jhunjhunwala and his better half Rekha Jhunjhunwala owned 5.53 per cent stake in the Tata Group firm as of June 30. Shares of Titan jumped 5.53 per cent to Rs 1,265.20 on BSE by 10.10 am. At this price, Jhunjhunwala's stake in the company was worth about Rs 6,200 crore.

    With Wednesday's rise, Titan has breached the bull case target of Rs 1,266 that HDFC Securities had set last month. The brokerage said Titan's 22 per cent earnings growth in last four years is already among the best in a tough period among its peers, many of whom are struggling.

    "We expect the company to benefit from the strong market share in the jewellery and wrist watches segment, mainly driven by a wide range of product portfolio catering to the premium and value-added designer jewellery segments. We have taken a 23 per cent and 16 per cent discount to five-year median P/Es to arrive at a fair value," HDFC Securities said on September 14.

    As of Wednesday, there were two 'buy', nine 'outperform' and 11 'hold' calls on the stock in the publicly available Reuters Eikon database. The stock also had five 'underperform' and two 'sell' calls. The stock has rallied 23 per cent in last three months and is up 6 per cent year to date. In comparison, benchmark Sensex is up 9 per cent in last three months and down 3 per cent for the year.

    Titan also said its watches and wearable division had a recovery rate of around 55 per cent in September quarter, with nearly 70 per cent recovery in September. "E-commerce is leading the recovery with absolute growth, but the trade channel continues to pose challenges primarily due to destocking," Titan said.

    In the eyewear segment, the recovery rate stood at 58 per cent, while September recovery rate was 70 per cent. "After a gap of 1.5 years, the division has again started selling products through Amazon and Flipkart, and getting good response. The division is recording highest ever net promoter score (NPS) till date. Teleconsultation was launched in July through a tie-up with Sankara Nethralaya," it said.
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    1 Comment on this Story

    Nirmal Choudhury58 days ago
    It means contraction in economy,job loss,liquid crunch are bogus! People has so much to spend!Sales post higher than the previous year!
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