Titan Q3: Jewellery Shines Despite Record Gold Prices | Ajoy Chawla | Business News | ET Now

Yeah, thanks. Thanks for having me here. It's a pleasure. Uh good morning. Uh yes, it's been a great quarter. Uh quarter 3 was highlighted with very high gold price increases and we were unsure how customers will behave. But I believe uh because of uh you know gold prices not coming down, fence sitters came in and there was a lot of fear of missing out and therefore a lot of customers came into the market thanks to festival and then the wedding season thereafter. Uh most of the growth has come out of ticket size growth. In fact, buyers were flat. But I must say all the other divisions and other categories have also seen very healthy double-digit growth. So overall, it's been a broad-based growth for us across categories. So jewelry has done rather well perhaps due to some amount of fear of missing out on the gold piece. I must also say that a lot of work went in by the operating teams to ensure flawless execution of all our plans. Be it new collection launches, be it exchange, be it doing a lot of work on the ground in terms of exhibitions, high value exhibitions which continued well into the quarter after the festive season as well. And the same holds good for the watch division, eyewear division, emerging businesses. So all in all a wonderful quarter to end with.

See it's very difficult to predict consumer behavior. As long as gold prices continue to rise up, I think uh customers tend to you know feel this particular feeling of FOMO. But in month of February we've seen some volatility in the prices. It's not just been a one-way upward movement, it's been ups and downs. So whenever those things happen, customers tend to wait and watch and see if they can time the market. Uh but you know it becomes very difficult to predict. I think if I look at the last several years, volatility has been a way of life within the quarter, within the month and certainly across the year. But if secularly gold prices continue to tend upwards, customers tend to come in especially when there are reasons to come in whether it's festivals or it's weddings otherwise they may hold on and see where it goes and then decide what to do.

It's a mix of both to be honest. We do believe that uh exchange gold is a great way for customers to get in and not feel the pinch and therefore we've kind of dialed that up in the last quarter and we continue to dial it up in the current quarter because we believe that's a good way for customers to come into the market. We do see a benefit even during exchange purchases that there's an upsell. Uh customers may come in with a certain gram of gold that they have but they tend to buy much more than what they got in it. Um it's also good both for the country uh for the planet and for the customer. So we believe exchange is a great way to go forward. We've seen a significant uptick on the contribution coming in from exchange in the last quarter, a 10 percentage points increase in contribution. [clears throat] Having said that, the FOMO factor plays out in general uh not just for exchange customers or for anybody else. I think it plays out even for new customers and certainly more than 50% of our business uh still comes from fresh purchases. So it is broad-based. I think that feeling is common to both.

So in quarter three, buyers for us, buyers is equal to volume, not grammage because customers don't necessarily have a grammage in mind when they come, they come in with some budget. So as long as more customers come in for us that means more volume. Having said that, in quarter 3 buyers were flat for us. In studded, the buyers were 3% growth, in gold it was a negative, and in gold coins, gold jewelry that is it was a decline, and in gold coins it was a growth in buyers as well as ticket size. So it played out differently in different segments. Overall it was a flat buyer situation. In CaratLane, we grew about 4% in buyers uh with the trends beginning to see upward in November and December on the back of uh some of the interventions that CaratLane did.

So, uh gross margins get impacted on account of two or three forces when gold prices go up. Uh firstly, how does the product mix change between gold jewelry, studded and gold coins? If gold coins goes up, typically that happens because of investment demand versus adornment demand. Then there the margins are lower relative to the other two categories. In studded the margins are the highest and in gold jewelry it's in between gold coins and studded. Now every time gold prices go up uh the studded margins as a line item as a percentage tends to reduce because there is gold content even in studded and there's a differential margin between the gold component and the diamond component in it. So I have said that earlier once gold prices go up substantially there is an impact on the studded gold uh studded gross contribution. So besides product mix and the studded gross contribution these are the two factors when you put it together it results in a gradual erosion in the um gross contribution. If exchange goes up uh there could be a plus minus because finally we are buying on spot uh from customers and there is an additional cost of processing exchange gold etc. But most of it tends to get covered up by virtue of upsell and other mitigation factors that we put in place. Uh at the EBIT level, we try to see that we sustain EBIT by leveraging operating leverage. uh but uh you know if if if there's a substantial increase in gross uh on gold prices therefore there's a substantial impact on gross contribution then EBIT can start trending downwards. So it's it's very difficult to predict because it takes time for us to also put in place all the mitigating factors and if it is continuously rising it runs into a challenge at a company level. We also have other uh you know categories. Now you know if watches and eyewear and um fashion accessories and all the other categories tend to go up there the gross margins are better. So even business mix comes into play. Having said that quarter 3 saw a fantastic uh performance in jewelry. Therefore, it kind of dominated and therefore the gross contribution of the uh overall company trended a little downwards because of the business mix also between these different categories.