Titan Company Ltd, backed by Tata, foresees a surge in demand for gold jewellery in the latter half of the fiscal year 2025. Despite challenges such as fluctuating gold prices and a scarcity of auspicious wedding dates coupled with the backdrop of elections in India, the renowned jewellery brand Tanishq remains optimistic.
Ajoy Chawla, the CEO of Titan’s jewellery division, expressed confidence during a recent retail event in Mumbai, stating that the second half of the year will outshine the first half. He attributed the expected stress in the initial quarter to the absence of favorable wedding dates, ongoing elections, and the elevated prices of gold.
Gold prices soared approximately 8% in the fourth quarter of the previous fiscal year, breaching the ₹70,000 per 10gm mark in April for the first time. Despite this, Titan reported a notable 19% revenue growth in its jewellery business. However, the earnings before interest and taxes margin (Ebit) for jewellery decreased to 12.1%, primarily due to weakened consumer sentiment and heightened competition amidst rising gold prices.
Although margin pressure is anticipated to persist in the first half of the fiscal year, Titan has maintained its FY25 jewellery margin guidance at 12-13%, according to analysts at BNP Paribas. The retailer observed a higher year-on-year growth in plain gold jewellery and coins compared to studded pieces in the March quarter.
Chawla emphasized Titan’s commitment to aggressive top-line growth despite short-term challenges. The company is banking on the continued formalization of the jewellery market in India and remains bullish about the demand for its brand and organized retail.
In response to the surge in gold prices, Titan is promoting more lightweight gold jewellery in the first quarter. Chawla highlighted their focus on ensuring sufficient supply across all stores.
Apart from Tanishq, Titan’s jewellery division includes brands like Mia, Zoya, and Caratlane, operating over 760 stores. The flagship brand, Tanishq, concluded the March quarter with 423 stores.
Recent reports suggest that India’s gold demand could witness a decline to the lowest level in four years due to the recent price surge, according to the World Gold Council. Furthermore, the domestic jewellery industry is anticipated to experience subdued volume growth in FY25 due to evolving macroeconomic conditions and expected price volatility.
Chawla also mentioned the potential boost in rural demand with a good monsoon, particularly from June onwards. He highlighted the disturbances caused by elections, which deter people from carrying gold for exchange due to movement restrictions and high gold prices.
Additionally, he pointed out the absence of favorable wedding dates in May and June, particularly in states like Bihar, Uttar Pradesh, Rajasthan, and Gujarat, which could lead to deferred demand post-elections.