Why the Q2 updates by Titan, Kalyan Jewellers buoyed investor sentiment

Titan Company Ltd’s shares touched a new high on Thursday while Kalyan Jewellers India Ltd’s stock soared more than 13% after the two companies said business was fast turning normal after the disruption caused by Covid-19.

Titan, the watches and jewellery arm of Tata Group, crossed a valuation of more than Rs 2.1 lakh crore as its shares jumped 10.7% to Rs 2,376.20 apiece on the BSE. Earlier in the day, the shares touched a high of Rs 2,383.35 apiece.

Shares of Kalyan Jewellers climbed as much as 13.75% to Rs 80.50 apiece, before closing at Rs 80 on the BSE.

The strong show came after Titan said it recorded strong recovery in demand after the second wave of Covid-19 across its consumer businesses with sales moving swiftly above or close to pre-pandemic levels in most divisions.

Titan said that most stores were now fully operational, barring a few in select towns with localised restrictions, and that overall store operation days exceeded 90% for the quarter. Apart from its thrust on digital channels, the company also accelerated its retail network expansion during the quarter. Tier-2 cities are seeing better recovery in walk-ins compared to metros, it said.

The company said revenue at its jewellery division jumped 78% during the July-September quarter from a year earlier. Revenue at the watches and wearables segment climbed 73%, and at the eyewear vertical rose 74%. Revenue at online jewellery unit Caratlane surged 95%.

“The demand postponement triggered by the second wave of the pandemic in avenues like gift purchases, occasions—milestone buying, weddings, investments in gold etc. witnessed a strong comeback in Q2,” Titan said.

Titan also said that Digital Gold is a new pilot offering that helps customers purchase gold online and lock-in the gold prices with an ability to convert it into jewellery at a later stage. “The early response has been good with enrolment of many digitally-savvy young customers,” it said.

Kalyan Jewellers

The jewellery company said it recorded robust momentum in both footfalls and revenue across all its markets in India and the Middle East in the second quarter.

“There has been a greater acceptance of the ‘new normal’, leading to increased walk-ins and more time spent at our showrooms by customers,” the company said.

Kalyan Jewellers recorded revenue growth of about 60% for its India operations during the recently concluded quarter, as compared with the same period in the previous year. This was despite the fact that there were lockdown-related disruptions in showroom operations in one of its key states, Kerala. The company’s showrooms in Kerala resumed operations fully by the second week of August.

The company said that same-store sales growth in its southern markets came in at around 40% during the quarter. Non-south markets recorded a higher same-store sales growth of about 70%. “This differential was predominantly due to the temporary closure of showrooms in Kerala during the recent quarter,” it said.

Kalyan’s overall same-store sales growth in India during the quarter was about 50%.

The overall revenue growth in India has been more broad-based across geographies, driven largely by the fact that eight of its 10 newly opened showrooms in the current financial year were launched in south India. Non-south markets recorded a revenue growth of about 70% and south markets recorded a growth of about 60%.

During the quarter, 92% of the company’s showrooms were operational compared with 88% during the same period in the previous year. However, as of September 30, 100% of its showrooms were operational.

In the Middle East, Kalyan saw a significant improvement in customer sentiment during the quarter, resulting in revenue growth of about 60% as compared with the same quarter during the prior year, despite the travel restrictions between India and the region for most of the recently concluded quarter. The growth was largely driven by same-store sales since it did not add any showroom in the region during the last 12 months.