Titan shines bright as jewellery business sees 98% recovery in Q2 — analysts see room for further growth

• Titan shares were trading 5% higher on October 7 after the jewellery maker said the sales are nearly back to the pre-COVID.
• Titan’s business improves in Q2, jewellery business sees 98% recovery.
• The company sees more potential in the near future with the arrival of Dussehra, Dhanteras, and Diwali next month.

With the arrival of the festive season, Indians are now going back to buy jewellery after a seven month long slowdown— at least that’s what the Titan’s quarterly update shows.

“The company’s return to normalcy on the business front has been progressing well with the almost complete lifting of restrictions in a phased manner over the last few months across the country, ‘the company said in its second quarterly update to stock-exchanges.

The COVID-19 pandemic impacted the luxurious business of jewellery makers the most. Analysts predicted that the business won’t be back until next year— as the layoffs and pay cut season arrived with the dwindling economy. Titan wasn’t immune to this either. Analysts at Goldman Sachs predicted that the sales might remain muted for at least the next two years. The management of the country’s top fashion accessories maker in the last quarter itself said the full recovery from the COVID-19 crisis is unlikely until the fourth quarter of this year.


But the festive season forced people to get back to jewellery stores or shop online. “There has been greater acceptance of the new normal amongst consumers, and they have been getting back to many of their routine activities leading to a positive on the walk-ins to the stores and time spent in stores,” the company said.


The 98% recovery in the Jewellery business will play a significant part in Titan’s second quarterly results as the business accounts for over 82% of the total revenue of the company, according to the HDFC Securities report.


And, there is more room for growth ahead. Titan sees more potential with the arrival of Dussehra, Dhanteras and Diwali next month. “The company is now gearing up to gain well from the upcoming festival season which is expected to further uplift the mood of the consumers,” it added.

Dussehra, Dhanteras, and Diwali are huge money-making festivals for jewellery makers. And while it may not have the same feel and buzz this year— it would be enough for the companies to recover the lockdown woes. Last year, Titan shares touched a 52-week high on Dhanteras as the demand for jewellery soared during the festive season.

Investors interest in share price mirror the recovery optimism

The shares of the jewellery maker are nearly back to the pre-COVID. In fact, it has gained over 33% since the beginning of the second quarter.


And, brokerages too have also revised their recommendation rating from ‘hold’ or ‘sell’ to ‘buy’ or ‘Add’. ICICI Securities believes Titan is best positioned to gain from faster than expected recovery. While HDFC Securities says that TItan is a structural growth story that will benefit from “strong market share in the jewellery and wrist watches segment, mainly driven by a wide range of product portfolio catering mainly to the premium and value add designer jewellery segment.”

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