Watch-eye wear-to-jewellery manufacturer Titan Company missed street expectations on every parameter with the third quarter net profit falling 18.6 percent year-on-year to Rs 166 crore on weak operational performance and sales.
Year-on-year net sales slipped 11 percent to Rs 2,650.5 crore in the quarter ended December 2013. It was the lowest quarterly growth in sales during FY14 due to a poor festive season.
"The sentiments in the market continue to be weak and the company witnessed an extremely poor retail-sales quarter for both its watches and jewellery businesses. The impact of festive season this quarter was much below our expectations," Bhaskar Bhat, Managing Director reasoned.
The CNBC-TV18 poll of analysts had expected the company to report net profit of Rs 199 crore on revenue of Rs 2,965 crore for the quarter.
Income from watches grew 7.5 percent to Rs 455.48 crore compared to a year ago period, but jewellery business recorded degrowth of 15.4 percent in Q3 primarily due to a lower demand for gold Jewellery.
"The jewellery industry was also adversely impacted by the regulatory measures implemented to restrict gold imports," the company said in its filing. Jewellery business income dropped to Rs 2126.67 crore in Q3 from Rs 2515.24 crore year-on-year.
Other businesses (comprising precision engineering, B2B, eyewear and accessories) income grew 18.6 percent to Rs 116.52 crore in the quarter gone by.
The company has an inventory of finished goods at Rs 410 crore during December quarter as against Rs 58.6 crore in corresponding quarter of last fiscal.
On the operational front, year-on-year earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 11.3 percent on yearly basis to Rs 220 crore and margin expanded 30 basis points to 8.3 percent as against analysts' expectations of Rs 291 crore and 9.8 percent, respectively.
Other income increased to Rs 26 crore from Rs 22 crore while finance costs jumped to Rs 27.4 crore from Rs 11.7 crore during the same period.
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