Titan ekes out a profit in Q1 but local lockdowns hurt

Titan Company Ltd swung to a consolidated net profit for the first quarter through June 2021from a steep loss a year earlier when a nationwide lockdown to control the Covid-19 pandemic forced it to keep its stores closed.

The Tata Group company posted a consolidated net profit attributed to shareholders of Rs 20 crore for the April-June quarter, compared with a net loss of Rs 291 crore for the corresponding period of 2020.

However, the first-quarter profit was down 96.5% from Rs 564 crore in the preceding three-month period due to localised lockdowns that state governments imposed to tackle the pandemic’s devastating second wave.

The maker of Tanishq jewellery and Fastrack watches recorded revenue of Rs 3,473 crore in the first quarter. This is up from Rs 2,020 crore a year earlier but less than half the revenue it generated in the January-March period.

Other key details:

1. Jewellery division recorded revenue of Rs 2,467 crore for Q1 versus Rs 1,182 crore a year earlier.

2. Jewellery division clocked earnings before interest and tax of Rs 207 crore for Q1 versus a loss of Rs 54 crore.

3. The watches and wearables business recorded sales of Rs 292 crore as against Rs 75 crore earlier.

4. Eyewear business generated Rs 67 crore in Q1, compared with Rs 30 crore in the same period last year.

5. Titan added 13 stores in Q1 and now operates 1,922 outlets across 297 towns.

Management commentary:

The company said higher revenue in the first quarter of the current fiscal year was due mainly to the base effect of zero sales in April last year, when India was under a strict lockdown.

It also said its jewellery division, which accounts for more than four-fifths of its revenue, is gaining good traction in new customers and its mix in total buyers has reached the pre-pandemic levels.

Titan managing director CK Venkataraman said the company started the quarter with strong business momentum but the second wave of the pandemic severely disrupted it.

“The learnings and experience of the past year helped us navigate this quarter’s turbulence much more efficiently. As the lockdowns started getting relaxed in different parts of the country in June, and with the rising vaccination level, we saw demand coming back steadily,” he said.