Titan Q2 results | Titan’s sales performance and high EBIT margins drives earnings growth

Titan's robust margin expansion and earnings growth was driven by stellar sales performance along with the rate of expansion in EBIT margin across all its businesses in Q2FY22. 

Titan's total revenue excluding bullion segment sales grew by 76% YoY to Rs. 7.03bn and including bullion sales, grew 66% YoY. Jewellery revenue, including bullion sale, grew 64% YoY, EBIT margin was higher than pre-pandemic levels and sales during the quarter were primarily driven by higher wedding sales (+81% YoY) vs sales in FY21 and FY22. Titan expects for a favourable festive season followed by a wedding season which would drive sales and profitability. During 1HFY22, Titan opened 15 Tanishq stores and is targeting to open another 20 stores in 2HFY22. The management believes that an EBIT margin of 12-13% is sustainable going ahead.

In Q2FY22, revenue for watches & wearables segment grew 72% YoY to Rs. 6.87bn. E-commerce channel reported sales stood at 25% vs 18% of sales in pre-pandemic period whereas retail channel recovery stood at +90% of pre-pandemic levels. Tier-2 cities have posted better recovery than when compared to Metros. The EBIT of watches and wearables segment stood at Rs. 920mn in 2QFY22 vs loss of Rs. 40mn in 2QFY21. Better scale of operations and expansion in gross margin improved the profitability and will continue this trend going forward. The main focus is on analog watches to drive sales and has gained share in its multi brand outlets. 

On the other hand, Titan's eyewear revenue surpassed pre-pandemic levels during 2QFY22 and reported a revenue growth of 70% YoY at Rs. 1.6bn and the highest ever EBIT margin of 23%. The jump in the EBIT margin was caused by changes to improve gross margin and cost reduction in the last 18 months. However, going ahead, the company stated that it will be difficult to sustain these margins during the next few quarters. Higher contribution of own brands has been one of the key factors aiding gross margins during the quarter.