Weakness in the global diamond industry could affect Titan Company’s profits as the fall in polished prices has prompted the Indian retailer to discount jewellery at the consumer level.
“We have not traditionally looked at price corrections based on this [type of] situation, but since there has been a significant impact, we have made small corrections in our pricing,” said Ajoy Chawla, CEO of Titan’s jewellery division, in an earnings call on Friday. “And to that extent, there may be some margin dilution over the next seven, eight months.”
However, the impact is “not that material”, Chawla added – meaning it’s not significant enough to affect investors’ decisions. This is because the fall in prices has been concentrated on “solitaires” – referring to diamonds of around 0.30 carats and above – which make up a small proportion of the company’s business.
In addition, the executive said, the company cannot estimate whether prices will recover or not.
The fall in prices should in theory make diamonds more accessible to consumers, but it also makes buyers uncertain about investing, he explained.
The comments came as Titan reported a 37% year-on-year increase in revenue to INR 126.53 billion ($1.52 billion) for its second fiscal quarter ended September 30, including subsidiaries. Jewellery sales rose 39% to INR 110.81 billion ($1.33 billion), reflecting successful product launches and marketing campaigns, the company said. Group profit rose 10% to INR 9.16 billion ($110.2 million).
“We remain focused on improving market share by offering differentiated products to our consumers that touch their daily lives in meaningful ways,” said group managing director C.K. Venkataraman. “The festive season [in the third quarter] has started well and we are optimistic about our performance for the rest of the financial year.”
Titan owns the Tanishq brand and is India’s largest formal jewellery retailer.
