Titan cracks 4% after it posted its first quarterly loss in over 16 years
- Titan's share price plummets 4% after it reported a net loss of ₹270 crores.
- The company’s overall revenue declined almost 74% year-on-year to ₹1,251 crore.
- Titan expects to return to “normalcy by the fourth quarter of this year”.
- The jewellery maker Titan's shares are down nearly 10% from pre-COVID levels.
Almost all of its segment from watches and jewellery to eyewear reported loss in the past quarter leading to an overall revenue declined almost 74% year-on-year to ₹1,251 crore.
"The severity of the disruption in business due to the pandemic impacted the Company's performance resulting in an unprecedented loss for the company. The company's reassessment of its cost structure during this period and inherently strong Balance Sheet, will help it to create a stronger base for a sustainably higher profit margin business,” said C K Venkataraman, managing director, Titan.
Along with the lost sales due to postponed weddings and less discretionary spending— high gold prices has added to the jewellery makers’ woes. Recently, gold futures have been trading at an all-time high of ₹57,500.
Any other year, this period would have been one of the best quarters for Titan. Traditionally, the wedding season in these months ensures solid demand for jewellery. Festive season adds to the jewellery sales as well. But COVID-19 has turned consumers cautious and there has been a fall in spending, especially with high-value items.
Sales to remain muted for the first-half
But it’s not just sales from the wedding business that the company stands to lose. Going ahead, fewer people will care to buy jewellery. According to Prabhudas Lilladher, the sales of the jewellery maker is expected to remain muted until the third quarter. The liquidity crunch due to coronavirus will impact gold demand post lockdown, and many people will sell their existing jewellery— which may widen the gap between buying and selling price.
Even the top management itself said that “we expect to get back to normalcy by the fourth quarter of this year.”
And, that is the reason the share price hasn’t seen a rally in the past three months. The shares gained only about 15% since the beginning of the last quarter and are down nearly 10% from the pre-COVID levels.
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