Ladies and gentlemen, good day and welcome to Titan Company Limited Q2 FY23 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. C.K. Venkataraman, Managing Director, Titan Company Limited. Thank you, and over to you, Mr. Venkataraman.
Thank you very much. Good evening, everyone on the call. For the last many, I would say dozens of quarters, there was one person who was a constant source of encouragement and support for Titan Company, and he is not on this call. We all miss Rakesh. Quarter two was a very, very good quarter for the company. All the macro factors, in a way, continue to remain in favor of companies like Titan. You would see from our note on the quarter that the season continued to be a good season, and our major businesses delivered a growth between 17% and 19% over the same period last year. Overall, we remain confident about the immediate future and certainly the medium-term outlook is also very positive in our view.
Since the presentation has anyway been uploaded, I don't have anything further to add, and we will wait for the questions to unravel. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nomura Institutional Equities. Please go ahead.
Yeah, sir. Thanks, and congrats on extremely good set of numbers. First question on jewelry. If I see, one observation was the studded share. See, most of the consumption habits have now come back versus pre-COVID. Studded, you have done well on YOY basis, but when I compare pre-COVID, there's a 500 basis points difference still. Is this because the mix of the business is now far more south focused versus earlier? I'm not saying entire business is south focused, but since pre-COVID is the south mix higher, and that's why reaching the 37% number this quarter was 500 basis points lower. Is it also because of the festive mismatch or gold prices being much higher than, say, three years back? What was the key reason?
Hi, Abneesh. Ajoy here. Yes, studded ratios have started climbing back, but they are still below Q2 of FY20. Pre-pandemic is what you're saying. Just to share the numbers, it was 41% then, and it is 35% now on a retail sales basis. Your base may be slightly different. The reality is that this is quarter two of FY20 also was actually a slightly abnormal quarter where gold prices had shot up dramatically if you recollect. The share of studded as a share contribution was perhaps a little overstated. But having said that, the dynamic is playing out. We have done a lot more work on, as you rightly said, different markets and particularly South and East and some of the other markets.
There is a trajectory for gold which is taken off at a higher rate, and that remains. Studded, we cannot really give an exact figure, but we are very happy with the growth. If I look at year-on-year growth, as you said, it's very good. It's 25% in retail terms. On FY20 also it's 56%, which would probably give us a CAGR of 15%-18%. It's a pretty healthy growth. Gold may be growing at a faster rate. That's. This is an outcome.
Right. My follow-up question on jewelry was on international business. It has become 5x YoY, so 400% growth. If I do the math, it's coming up to around 3% of your overall jewelry business is coming out from international. Wanted to understand confidence on the U.S. foray. Secondly, other geographies, if you could give color in terms of international, are they also doing well? Where do you see this number settling over a three-year timeframe, given the kind of success you have seen? Is there a risk that this may slow down also in the coming quarters?
Before Venkat comes in to give you more perspective, just one clarification I will give you that as the IBD network, international network is expanding, so whatever supply happens from India, you know, to fill up the inventory and prepare the inventory for new stores, that is also sitting there, Abneesh, and that is where that 3% is sitting. The rest of the question, of course, I will ask Venkat to respond to you.
Yeah. We have now many stores in the GCC region. Each store is, you know, playing to its potential as well as plan. We are quite gung-ho. Many franchisees, you know, from India are lining up to partner with us there. We are also looking at external partners. The US store is yet to open, hopefully sometime in November, because some of the complications relating to permission and all that, we are, you know, these are new to us. But once we get our first store and become clear about what all is required, I think the ramp up will begin. Every store is playing out to plan, diamond ratio, ticket size, customer satisfaction, which is a Net Promoter Score.
Even our trunk shows in New Jersey, in Houston, in Dallas, you know, before we actually set up the store, are all confirming the potential. We are pretty gung-ho. Currently, we are staying with the indication we had given in the investor meet, which is 2,400 by 2025, if I recollect.
Sure.
By 25.
Sure. Thanks. That's useful. My last question is on the eye care business. So are you happy with the 4.9% sales growth? Because on a much smaller base, obviously it is growing much slower than your other two larger businesses. When I see the advertising spend, say around 7-8% of the sales, it's up sharply YoY. I don't think it's that relevant given COVID impact in the base quarter. For the category also, is this the kind of spend, 7-8% in terms of ad spend? And 4.9% growth, how do you look at this versus the category growth?
Hi, this is Saumen here, Abneesh. Quarter two, if I break into two parts, July sales are actually pretty good. Okay? We had fulfilled our own expectation of the numbers. It is in August and September, more so in the month of September, by the time the festivities came in, we saw a sluggish demand, and therefore, sale was below our own expectation. To that extent, growth was lower. Given that, people are celebrating Diwali after two disrupted years, I don't think the specs was top of anybody's list, and therefore we would consider that as one of those, if we have got something as a need-based category advantage in the last year, we probably have seen the other side of it.
That would be my take on the growth side. As far as marketing is concerned, I think we invested more than what we did last year, and it's going to get only higher in the two quarters that we are entering into.
Yeah. I asked that because out of all your three key businesses, the smallest business has the highest margin. That, on such a smaller size, that kind of 16.5% EBIT margin seems slightly too on the higher side. I hope you're not under-investing there.
Yeah. We take your view on this. As I said, the second half would see a lot more investment in the customer acquisition side as well as the footprint that we have already promised ourselves that we'll reach 1,000.
Sure, sir. That's very helpful. That's all from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just a follow-up on the, you know, question asked earlier on international. In this quarter, you know, primary sales for international business must be around INR 225 crore-INR 250 crore. Can you call out what will be the secondary sales? The reason I'm asking this is, you know, your guidance of INR 2,500 crore indicated about 30 stores by FY27, and currently you have 4 stores, and in this quarter, primary sales reported is about INR 225 crore, and your guide is saying INR 250 crore. Just to get a sense whether, you know, anything has surprised you positively in terms of, revenue throughput per store, for the international business versus what, you know, you had indicated as well.
Yeah. Like Ashok was clarifying, actually don't look at the billing from India into this. I'd like to confirm that the stores are in the INR 80 crores-INR 120 crores average, in the range of INR 80 crores-INR 120 crores, per year. That's the full year, wherever it is full year or run rate, wherever it is new. We are, you know, sort of so far so good on track for that, FY27 figure that you're describing. 30 stores, INR 2,500 crores should happen. Obviously, the network has to fall in place, but the run rates are consistently happening.
Understood. That's helpful. Second is, you know, in this quarter, year-over-year sales growth ex-bullion is 18%, whereas the total sales growth is about 13%. Is this usual or is there any change in store mix or this is perhaps also related to the international subset of sales?
Yeah. I'll take that, I'm Ajoy. The 13%, I would like to first offer a correction for everybody on this call. It is to be read as 15%, because when you look at all channels, Tanishq, Mia, Zoya, e-commerce, and institutional, all domestic growth actually is 15%. This 13% probably reflects only one channel. Therefore the like to like is likely to be closer to 11%. Having said that, is 15% good, bad, ugly? That's the question that you seem to ask. We think it was-
No. My question was related to the gap between 18% and 13%, which looked higher than usual. If it is 15% and 18%, it not very different from what we have seen in the previous quarter.
The rest of it is explained by pipeline filling.
Okay.
-for which, Ashok explained.
Sure. Thank you so much. Final one is, you know, first half year EBIT margin for jewelry business stand-alone is 14.4%. You've maintained 12%-13% as your comfort zone or range. Would you like to upward revise that band?
Jay, Ashok here. You know, the focus on this quarter where we have 15.3% is the jewelry margin. There are about 2% represented by certain items which are not sustainable. You know, one is of course our customs duty related gains, the other one is also on diamond pricing. This being a studded quarter, of course, so as we are at 13.3%. Quarter two being a studded quarter should have a high margin. 13.3%-15.3% is not sustainable. We are still talking about that, back 12%-13% in the medium term, next 12-18 months. That's the range which we think more comfortable with.
Perfect. A quick one there. Have diamond prices come off and are you seeing sort of change there?
Sorry, can you repeat your question? You broke. Your voice broke.
Have diamond prices come off from peak?
Diamond prices are no longer going up like they went up earlier. We have not seen any reduction. Little bit of softening on the higher caratage solitaires. On the bulk of them, which is more in the small diamonds or the melee diamonds as we say, there is no letup. Supply still remains a little constrained.
Thank you so much. Excellent.
Have we hit the top? Yeah, perhaps. We don't expect it to go up further.
Thank you so much. Excellent quarter. Thanks, Ajoy.
Thank you.
Thank you. The next question is from the line of Abhi M ehta from Macquarie. Please go ahead.
Hi team. Congratulations on this performance. Just continuing with where Jay left, essentially on the other segments as well, in particular watches. We had shared that we would look at, I don't know, close to 13% as a more steady state, but the first half has been very healthy. Just wanted to get your sense, A, whether there's a one-off over there, or should we assume that 13% probably can be breached? Similarly in the eyewear where you had indicated an over 15% kind of expectation, should we also revisit that on the margin side? Thank you.
There is no one-off in watches. Similarly nothing in eye care. Eye care is still. We believe mid-teen is the number. Just in the earlier question you heard there is a need to invest more on marketing and store expansions are happening. I would still say that mid-teen number is much better to anchor expectation. As far as watches is concerned, they are doing well, growing well. The premium part of the watches and channels are doing well, and that is where margin is good. We have always thought that watch is a high operating leverage business. Yeah. I would say 13%-14% seems to me better expectation anchoring rather than thinking about quarter two margin.
Got it, sir. The second part is on the demand side. You know, you had shared last time risks from, you know, low ticket size demand that you saw weakness. There have been some players who have been arguing about pricing-based competition rising. Anything on the demand side that makes you worried?
You're talking about any particular segment or across?
Sorry. Jewelry in particular.
On the entry points, in fact we've seen a good healthy pickup on gold in the season. During the quarter two we saw a good pickup on studded as well. You know, because it is a studded activation. At an overall level, I would still say that in the sub INR 50,000 and sub INR 1 lakh, there is some amount of pressure. The growth on the higher segments is coming more easier, perhaps because, you know, different segments of the population have got affected differently. Also inflation has been there both in gold and diamonds over time. I think that may also be adding to a little bit of stress in the sub INR 1 lakh segment at a buyer level.
in that, you know, just, you know, probing a little bit more, you did see 17, you know, to 19% growth in the festive period on a like-for-like basis. Would it be fair to say that your expectation would be a double-digit growth in the third quarter at least despite the high base? Or there are too many moving parts that would make it difficult to extrapolate that?
You're right, there are many moving parts. What we can say for sure is the 36 days that we looked at from first day of Navratri to end of October, compared to a similar period last year in jewelry, it was in that close to 19%, 18.5%-19%. How that will pan out in the rest of the 2 months is difficult to say, because quarter three was a high base last year, and it was a very good growth over the previous year.
That in turn was a very good growth over the pre-pandemic. Difficult to say. Things are a little volatile.
What I meant is, was this growth in the next, in the post-festive period, is that what how the base was? I'm just trying to understand the base better so that we are-
No, the base was good only, even post-festive. For us to be able to commit to any kind of growth for quarter three is very difficult to say right now. But what we have shared with you is how the season has gone, which I think is a substantial.
We are still in the midst of enjoying that 19% growth that we closed two days back for us to start thinking about the next two weeks or so.
Fair enough. Thank you very much, and, congratulations and wish you luck for it. Thank you.
Thank you.
Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi, Venkat. Good evening, team. Thanks for the opportunity. I give full compliments and full marks for this outstanding growth in this quarter, and I was quite impressed what you've spoken during 4-5 months before during the analyst meet. I think the margins in the watches and wearable, and in fact it was heartening to see the turnaround which is happening in Eyewear. The only concern which I have in both businesses, as Ashokji mentioned, that there is a strong operating leverage. I think going back in the past 4-5 years, what we have corrected, and now we have got the model right. Do you think this business, both the businesses, have a lot of strong momentum in terms of demand?
Because on a prima facie, it looks like discretionary demand is going to be stronger in next two quarter. Are you saying that all the past and the learnings we have already implemented and these two businesses will not look back again?
Shirish, for the watches and wearables division, we are seeing strong growth coming in for both quarter 1 and quarter 2. Quarter 1, of course, in a very weak base. Quarter 2, except July, August and September was already back in full swing. We are seeing good demand in the higher priced brands, higher priced products, and in the more premium channels, and that continues to kick in very strong. At this point, that is the ride, that is the wave that we are riding on. The more economy-oriented price points are not doing as well. There are some pressures in terms of demand there. Overall, being multi-category, which is watches and wearables as well as multi-brand, as well as multi-channel.
The interplay between the brands and channels, the way it is panning out right now is, that Titan watches come back strongly. The premium brands are doing well. Premium channels are doing well. I think that is probably going to be similar, it is going to behave similarly for a couple of quarters. After that, we'll have to wait and watch on how things pan out.
Just, uh-
Hi, this is Saumen. As far as eye care business is concerned, Shirish, I think we have got our basics organized, and therefore, we do not anticipate any more shocks at least. On the demand side, I think if what I mentioned earlier, after two years, if people put the you know need-based category in their secondary list, I suppose you can't fault it, and that's our take on the quarter two. As I said, July was very good. August and September is what we actually experienced a bit of a sluggishness. If you were to go by the last seven days, soon after Diwali, as an indicator of what lies ahead, I would say that we should bounce back in the quarter three well.
Whatever said and done, it's still a need-based category, and people would buy as they need. We are positive about the quarter three and time will tell.
I got that. That's helpful, Suparna and Saumen. My only worry is that now we have reached to a better margin profile. I just wanted to hear from you what is the strategy. Are we going to maintain the margin and look at the growth as a stabilized matter, or are we go back and say that because we have taken a very aggressive market target for expanding stores. What I need to understand and confirm from you that the model and the business is on the sound footing and whatever new products what we are getting into it. For example, Reflex is one of the thing which is picked up very well. I think is that the thing which is in our confidence and in business, in it, in our control?
Yeah. I agree that the basics are working well. In terms of, you're right, that we've taken very aggressive growth as the main focus. Margin, as was explained by Ashok a little earlier, we are looking at 13%-14% and really investing in the growth of the business for watches and wearables for at least this financial year.
Okay. Similar thing for Eyewear also. When we did 20+% also we maintained, and we have been consistent on this, about 15% give or take would be the expectation in terms of margin. The rest of the energy and focus would be in order to sort of expand our.
Okay. My last question is on the jewelry business. I think sometime when we met in person, somewhere we picked up that we were still underrepresented into high value studded jewelry. Is that the thing which we are now focusing and that has really helped us to expand the jewelry sales and contribution, or still it is underway?
No, it is certainly under pitched even now because though we have focused a lot on it, and we have seen a very good jump. In high value studded is back to what it was, let's say, three years ago, pre-pandemic level as a contribution. That we have seen disproportionate growth there because we've also focused a lot on that. Having said that, the opportunity on that we have still scratched the surface. I mean, there's a huge opportunity. A lot also depends on how customers are comfortable bringing out their PAN cards, et cetera, above a certain level. That's a gradual process, but the opportunity is large.
Yeah. I'm only telling this with confidence because having spoken to many people on ground, I think all those big bang weddings which has not happened early part of the year, they all are coming back. This is a very opportune time for us because we are one of the preferred and trusted brands, so we should get that opportunity.
Let's hope so. Yes.
Yeah. Thank you. All the best, Venkat, and to your team.
Thank you, Shirish.
Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.
Hi. Good evening, sir. My first question is on the jewelry margins. You mentioned that there are certain one-off gains there, and one of them was related to diamond pricing. Can you elaborate on that? I did not understand what that refers to.
Okay. Ashok here. Diamond pricing has a few aspects to it. You know, we have been as our risk mitigation strategy when the supply chains were getting disrupted, we started buying ahead of time and stocking up. And then diamond price kept on going up for some time. Today now they are plateauing, but some of those purchase decisions which were part of risk mitigation strategy have worked really well for us, and that's the stock which is giving us good realization and margin. That is what I meant.
Understood. A couple of quarters earlier our commentary used to be that there's a lot of price competition among the organized players. What is the situation on that aspect currently? Any comments on that, please?
Yeah. Percy, I think the price competition continues. In fact, it has intensified and, every player, whether organized or, independent jeweler or a regional chain, is now fighting strong to retain their customers. The price intensity is high. Price competitive intensity. It continues.
Again, despite that and adjusted for the 200 basis points gain, we are still posting 13.3% margins despite high competition. Where is that high competition manifesting? In what way do we see it manifesting? Because the margins are normal, growth is good. Is it a really relevant point for us?
Yeah. Two factors beyond the one-offs of 200 basis points. One is this was a studded quarter, and typically you should compare it to a studded quarter, EBIT margin because the mix changes the situation and therefore annualize it may be very different. Second piece is that some amount of operating leverage also kicks in when we do a certain quantum of sales. I would give more weightage to the first point that I said.
Okay, understood. Second question also on jewelry segment. See, the growth is very, very strong right now. On three-year CAGR basis, we are doing 25% plus in jewelry, et cetera. Of course, there's a pricing element on a three-year CAGR, although not on a YOY. My question here is that this is not linearly every quarter, et cetera. There can be sort of periods of troughs and peaks. People can postpone, prepone, et cetera, et cetera. I mean, keeping this in mind, are you worried about FY 2024 growth in the sense that people have bought so much jewelry in the last three, four quarters that there might be some amount of satiation reached in the customers and FY 2024 growth could be at risk on a YOY basis? Any thoughts there?
It's rather early to think about FY24 growth. Just to clarify, I don't know if the 25% you've derived based on the primary sales reported, et cetera. To help clarify that, for the quarter, it's a CAGR of around 23% over a three-year period, so pre-pandemic to this recent quarter. If I look at that is a mix of healthy buyer growth. The ticket size growth, you know, will be about 6% or so. The rest of it, about 17% is a CAGR on buyer growth over the three years. What gives us hope and confidence is our continued gain in market share, our continued share of new buyers. Even for the quarter that went by, we saw a new buyer contribution of 46%.
The same figure in quarter one was around 43%.
You know, new buyer share. Therefore, it gives us the confidence that more and more we are able to attract new buyers. Whether or not people are satisfied, their share of jewelry purchase, very difficult to comment, but the headroom for us to grow on market share itself is huge.
Also Percy, you know, unlike other expensive discretionary categories, jewelry is also a store of value. There have been so many instances where, let's say yesterday a woman came and bought something worth INR 2 lakhs and 20 days later a beautiful collection comes and the salesperson calls her, and since she again buys INR 2 lakhs worth 20 days later. Because it is a store of value in India. Whereas in most other countries it's a discretionary product, which is an expenditure. In that sense, there is never a satiation limit kind of thing for jewelry. I mean, I'm saying in a broad sense.
Plus, in a INR 400,000 crore+ market on a INR 34,000 crore thereabout kind of sale in FY23, maybe for the jewelry division, you know, the market share opportunity like, Ajoy said, and I'm just pinning it with the tens of thousands of crores sitting outside our share, to play in, innovate and actually grow.
Just to add, you know, Percy, if you look at our GHS, and if that indicates any intent of buyer to buy after 10 months, 12 months, we are seeing very healthy enrollment and growth. I think, yeah, that's also one of the indicators which gives us confidence that nothing is much changing in FY 2024 unless something unusual happens.
Got it. Very helpful. Thanks and all the best.
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead. Mr. Siddhant, please go ahead with your question. Your line is unmuted.
Hello, can you hear me?
Yes, now we can. Go ahead.
Yeah. Hi. My first question was regarding CaratLane. How's their balance sheet looking like? They've been growing very well. Will they need further equity infusion or they're good to go for now?
CaratLane is good to go for now, and anything which they need to do, they have the borrowing capacity and banks are willing to extend them at competitive rate. Being a part of Titan Company helps them in that context because then debt equity ratios are slightly immaterial from their ability to borrow more. At this point of time, I don't think there is any primary equity infusion is contemplated. They can borrow and fund their growth.
Currently, do they have any debt on their books?
They have working capital. They have gold metal loan. They would have about, I think, INR 400 crore worth of working capital loan on their books.
Okay, second question was, you know, regarding IRTH, you know, our new launched in the purchase division. What's the market size and focus for us over there, or it's too early to comment over there?
Hi, this is Manish. We are estimating the market size to be about INR 4,500 crore.
Okay.
Of which one-third is organized, growing at a fast clip. Maybe in about 5 years it will be about INR 3,000 crore, and we are having an ambition of targeting INR 1,000 crore and INR 3,000 crores organized here.
Okay. INR 1,000 crore in 5 years?
That's right.
Okay. Currently now I noticed that you've been just importing from China this time. Do we plan an in-house thing in for IRTH or how does it go?
No. At this point in time, we are still evaluating option, but we are importing from China, but we are building capacity and capability also with some of our lines from Made in India for e-com purpose, for example. We'll evaluate option in the future from a vendor base in India.
Okay, great. My last question, you know, is regarding Taneira. It's still a relatively unknown brand. Of course, I think I noticed that you've doubled your marketing-
Siddhant, I think you've gone on mute.
We'll move to the next question, which is from the line of Manish Poddar from Motilal Oswal Asset Management. Please go ahead.
Come back.
Hello? Hello?
Yes.
Yeah. Yes. Thanks for doing the call. Primarily two questions. One is, you know, the absolute ad spend which we do annually, you know, if you could just help me understand the broader breakup, you know, what would that be for the jewelry segment and for the other segments?
No, we will not able to disclose that, Manish, but businesses are mature, have different level of maturity and scale, and that is how they take themselves, you know, how much percentage of their revenue is appropriate for them to do. Depending on different product launches, collections, et cetera, all those things, and festivities, et cetera. We will not able to kind of give you, business-wise, advertisement details here.
So do you look at the spend as an absolute amount or you look at as a percentage of sales? Because, you know, this number was roughly about INR 522 crores in about FY19. FY22, I understand there was some, you know, COVID bit and stuff like that. This number was about INR 475 crores.
I'm just trying to understand, you know, it because INR 600 crore is a large sum for a company. I'm just trying to understand, you know, do you look at an absolute number or look at it as a percentage spent?
I mean, in a mature business, it is certainly a percentage of sales because it's a value, you know, chain building thing. In new businesses, it is absolute because we need minimum levels of investments to break through.
Okay. Second bit is probably early days, but you know one of your peer set or you know one of your larger peers is you know rolling out this franchisee model. I know it's early days but any sort of you know on ground you know when you interact with your you know channel partners any sort of difference in terms of negotiation or you know and just your thoughts around this you know.
I think none of our channel partners, franchisees from the business, will be participating in that. I understand where you're coming from. There were some statements made by this peer.
Yeah.
against a group of analysts as I was given to understand. None of our franchisee partners is participating in that, and it's very clear for them and for us.
Okay. Fair enough. That's really helpful. Thank you.
Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.
Yeah. I don't know why it got disconnected, but my question was regarding Taneira. It remains quite an unknown brand as of now, relatively speaking. When do we plan an inflection point where we get a brand ambassador, you know, a pan-India marketing campaign, things like that?
Hi, Siddhant, this is Ajoy, and you're right. We are investing in advertising and building brand visibility and building the brand. We are seeing some very good results of that. Looking at whether we get a brand ambassador or not, I mean, that's not a discussion that we are having right now. We are focused on you know, building the footprint across the country. Now we have 31 stores in 14 cities and we were 20 stores by the end of FY22. We are satisfied with the progress of store expansion and sales growth. Maybe just watch a few quarters and we will share more with you.
How many stores do we plan to add this and the next year?
We plan to close this year, which is FY23, around 50 stores.
Okay.
Next year we would be opening about 30-35 stores.
Okay. Most of these new stores will be franchisee or, you know, owned by us?
No, as I think, the franchisee stores contribution is already 55%.
Oh, perfect.
Continue to be largely franchisee.
Okay, great. Great to know.
Thank you.
Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead.
Hi. Thanks for the opportunity. I have few questions or clarifications on the jewelry segment. The first one was, you know, if you could share some color on wedding demand, you know, through the quarter or how do you anticipate this to play out, you know, over the second half of fiscal? You know, you would have some sense, you know, on pre-bookings or pre-orders, if you could share that with us.
The wedding demand, Latika, has been muted, if you ask me, both in quarter one and quarter two, even though there were weddings in quarter one, perhaps because of timing of purchase, people might have bought it earlier, et cetera. Last year, quarter two actually had a good incidence of wedding buyers, perhaps due to uncertainty of what may happen coming out of a COVID situation, et cetera. This year we have seen that, it has gone back to, you know, the lower contributions that you usually see in quarter two. Given that both the first two quarters have been muted, our anticipation is that there should be a fairly strong wedding demand, though early signs are not yet clear.
You know, sometimes you have to just take a punt and be prepared for growth when it comes, and this is something that we've seen happen time and again in the last 18-20 months. We are actually punting and pitching strongly for wedding demand, and we have got enough collections and campaigns and, you know, on the ground events that we are continuing to do because we see a very good potential for this. Even if something doesn't come up in a particular quarter, it doesn't matter. Our share of market share in this is so low that anything we do now will keep on building a strong pipeline for the future. We are hoping. We are hopeful and optimistic of a very strong second half for weddings. Yes, early days yet.
We will wait and watch how things pan out over the next few months.
All right. The second bit was on, you know, new buyer growth, you know, which has been fairly impressive. I just wanted to check, you know, that if you exclude the new stores that you've added, you know, over the course of the past year or so, you know, how does the new buyer growth look like on a like-for-like basis? You know, is that tracking your expectations? Is the difference versus the 10% that you saw in this quarter, you know, significant or is it on similar lines?
We are seeing reasonably healthy like to like buyer growth. We have seen good buyer growth in terms of new buyers. We are seeing healthy, both new as well as total buyer growth, including same store growth. I won't be able to give you a number, but the percentages are fairly good.
Are these new customers coming for the high ticket, high purchases, or are you seeing more of these coming at the entry level, you know, for your existing stores?
Usually, new buyers will come in at entry level. This time around in quarter two, we have also seen adequate number of new buyers come in at the upper end, you know, especially for the high value studded end as well. Earlier on, some, a few months ago, we had also seen some new buyers come in for something like the Polki collection which we had launched. Yes, the majority still come in in the entry point. Now we have started also seeing some incidents of high value purchases from new buyers.
The other bit, you know, which I wanted more clarity was, you know, you alluded to the fact that price competition in the category has intensified. Have you also participated in this with more competitive pricing? Has your price premium versus the other organized players increased, or it is stable because you've decided to match it?
It's a complex question to answer, because pricing is a function of gold rate as well as making charge. We have tried to balance it out between the two. Though, you know, it's difficult to argue whether it's on an absolute level, gone up or low. Very difficult to answer. We've become more competitive on gold rates, but we are managing product mix, we are managing making charge, and as a combination of that. In studded, I think, our premiums have gone a little higher because, you know, we've kind of implemented price increases as and when we've seen the cost going up. I'm not sure if the rest of the market has done that in that manner.
Maybe on a like-for-like basis, some premiums have gone up on the studded side.
All right. Maybe the last bit was on store expansion. You know, first half saw 14 stores added to Tanishq and about 19, 20 stores for CaratLane. You know, what is the number or largely, you know, we ask, you know, expected for full year FY23?
Okay. I'll give a clarity. 14 stores for Tanishq. What we don't report here is also the significant expansion in existing stores. Almost another 11 stores we have expanded significantly by 40%-50% their area has gone up. Each of those expanded portion is like a store. On an average of 2,600 sq ft we've added per expansion. Technically, you can say Tanishq has added almost close to 25, you know, or so. Mia has added about 30 odd stores till October, maybe 29, I think, or some such number was there.
For the quarter?
For the quarter, it's there.
16.
For the quarter it's 16. Mia, if I add, we've had a lot of openings in October, I'm giving you an updated view. CaratLane also we've added quite a few. You know, we added, I think 20 in the first half, 14 in quarter two, but thereafter we've added quite a few more actually. We've added another 13 or 14 stores in CaratLane. Overall, each of our brands is on a fairly aggressive expansion spree, because the opportunity is there in new catchments as well as new towns. I think, I don't know, guidance, Tanishq will probably see totally new stores of 30-35, but we may also land up expanding about 20 odd stores by the end of the year. Mia will probably see a 60-70 store additions.
CaratLane also is gunning for an aggressive similar number of store additions.
Great. Thank you so much, Ajoy, and wish you the best.
Thank you.
Thank you. The next question is from the line of Vishal Gutka from PhillipCapital. Please go ahead.
Yeah. Hi, sir. Congrats on a good performance. I have two questions. First question is that India has signed agreement with UAE for getting gold on concessional duty rate, 1% concession they get on import duty, with first tranche being restricted to 200 tons. Are we applying to get gold under this scheme? Any sense on that?
Yes, Vishal, we have done so in the first installment up, you know, for the first quarter when it started. We got 540 kgs license. We are now, in fact, in the process of utilizing that because that was extended till November. In the next quarter, we have put an application. We've got again a significant quantity on that.
Just to add to Ajoy's, you know, this 200 ton which you mentioned, it is over 5 years. Like, it starts from 120 ton, and then it goes up to 200 ton in the fifth year. Then there are quarterly allocations which are happening. First allocation came in quarter two, but it came very late, so import time has been provided till November end. Then the quarter three reference which Ajoy spoke about, we have got some higher allocations based on our capacity, et cetera. It's a quarter-to-quarter thing, but we are very much participating in that.
Got it. Indirectly it's a win-win for the organized players because larger organized players will be able to generally get this gold at a concessional rate. That 1% concession is there. Overall beneficial for overall organized players, right? Yeah, because smaller players will find it difficult to procure under this scheme.
Many jewelry vendors are also fairly large, so they have also applied and that benefit can translate to other players as well. I wouldn't make that assumption entirely.
Got it. Sir, second question is on any sense of benefit coming on hallmarking front. Have you seen that benefit coming to us? Because now almost 9, more than 9, 10 months that since hallmarking became mandatory in India. Any sense if you can provide on hallmarking front, it will be helpful.
Difficult to, you know, estimate whether we have got any direct benefit by virtue of hallmarking specifically. Yes, the broader theme of, you know, migration of customers from unorganized to organized continues to be a secular trend. Frankly, on hallmarking, I can't really, you know, I can't really say.
Okay.
Whether we are getting any specific, it's very difficult to arrive at that view.
Okay. Thank you so much, wishing you all the best for the future.
Thank you. The next question is from the line of Anuj Mukashi from Yadnya Karami Private Limited. Please go ahead.
Yeah, thank you for the opportunity. My question is about this Zoya segment. Like, what is the growth we are looking in this segment on quarter-on-quarter basis, or year-on-year basis, and some plans about expansion here, if you can share some guidance on this.
Yeah. Just to give you a flavor, Zoya, a few years ago, three years back if I'm not mistaken, was around INR 76 crores, then it went to some INR 78 crores. Last year we did about INR 135 crores. This is all consumer price, so not NSVs. This year we have completed that INR 135 crores of last year in the first seven months. We are looking at anything between INR 230 crores-INR 250 crores. Given the base being so small and very few stores that we have and a very small customer base right now out of the very significant HNI population and that's growing, I think the opportunity is very large. On that very small base, you know, you can take any growth you want.
It won't materially alter the jewelry division or the company's top line. For that brand, yes, can we see it to be a INR 500-INR 700 crore business over the next few years? Surely. Can it go beyond that? Perhaps, but don't have a view on it right now.
Okay, my second question was about region-wise contribution in the jewelry segment, revenue mix. How much is South region contributing? You can share that data.
South region. Yeah, we'll probably give it to you later. I don't have the exact figure, but it's beginning to get to its fair share among the four regions. I think by the end of this year, probably it may be a fourth or maybe slightly less than a fourth, but I don't have the exact figure now.
Okay. Sure. Thank you. Thank you so much, sir. That's it from my side. Thank you very much.
Thank you. The next question is from the line of Vijay Gala from Gala Consultancy. Please go ahead.
Hello? Hello?
Yes.
Hello?
Yes.
Can you hear my voice? Hello?
Yeah, we can hear you.
Okay. Regarding everything asked from the delivery point of view, congratulations for the good result. Tata is a brand name, and we hope so that I think on the one point, another point of view, subsidiary is Titan Engineering and Automation Limited. Defense portfolio is there with you. How much order position is there in the aerospace and automation project I asking?
Could you just repeat the last couple of sentences?
Yes. We have the one subsidiary, Titan Engineering and Automation Limited.
Yes.
What is the aerospace division you are doing, and what is the order position?
No, we are not in a position to share the order position.
Doing very good, no?
The numbers are there for you to see. I think they have done well in quarter two. They have two businesses. One is the manufacturing services we call, where aerospace, defense and some of the newer tech area equipment they are supplying. The other one is automation solution services. Both businesses are quarter two particularly, they have done well and they are expected to continue to do well while the end customer environment is not so certain at this point of time. They serve to US and European customers as well as Indian customers. It is more linked to cyclicality of economy, this business. Currently they are doing well. Good order inquiry, good order booking. Yeah, all okay.
Okay. Thank you, sir. What about that is continuous division will be going concern or what will be otherwise will be demerged into another company?
It is too premature to start discussing anything on that with you.
Okay, sir. Thank you. Congratulations on future. Tata is a great brand. Thank you, sir.
Thank you very much. Thank you.
Thank you. The next question is from the line of Sridhar Hari from Morgan Stanley. Please go ahead.
Thank you for the opportunity. I just had one question. You know, when I just draw the conclusions from what you have said, the point you made was that the entry-level demand was weak, wedding demand was weak for second quarter in a row and, the new buyers are coming at the upper end. Of course, this was an activation quarter where, you know, the results have been phenomenal. You know, going ahead, is there something we are worried about, especially with respect to, weakness in wedding demand and as well as, the entry-level demand?
Yeah. I will answer this. First of all, when I say weak, it is relatively weaker. It is still healthy growth, but the growth in the higher end is better. Therefore, I think in relative terms, perhaps I didn't clarify, growth is coming easier upper, but it is coming, but it's not as easy and free-flowing as it is in the upper end. Secondly, even for new buyers, I would like to moderate that comment and say that a few new buyers are now coming at the higher entry price point, but the bulk and the majority still come at the entry level, sub INR 1 lakh. Thirdly, growth of new vis-a-vis growth of, let's say, repeat customers continues to be well-balanced.
In fact, both in activation period of quarter two as well as in the festive season, we have seen new buyer growth outstripping total buyer growth. We are not worried about it at all. Whatever little bit of pressure is there at the entry point, we are anyway addressing it in many different ways because the opportunity continues to be large. Nothing to be worried about.
Understood. Just to follow up here, is there a divergence with respect to the regions? You know, I mean, are we seeing stronger growth coming from western region and weakness coming from the southern region? Is there any divergence there?
Not really. See, when you look at it point to point, year to year, you will always find some ups and downs. When you look at it over a three-year horizon, South continues to grow for us because our penetration and our own market share there is much lower. The headroom is much higher. Certain bigger cities, let's say last two years, metros went through a tough time because of COVID. It may look like, oh, in this quarter metros have done better and tier two might have done slightly lesser, but both have grown. To draw any some long-term conclusions on that, I would be wary of. Overall, I would say certain pockets, yes, there have been, you know, which have been a little bit under lower growth.
Some parts of the east and some parts of eastern UP, they've been affected by floods, et cetera. Really, you know, you can't draw large conclusions based on that. Therefore, we are powering and chasing growth on all the fronts. We see that some of these ups and downs are like noise, in a volatility situation. Secularly, I would say that there is no clear trend emerging.
Understood. Thank you so much, Ajoy. That is from me.
Thanks.
Thank you. The next question is from the participant who has left the queue. Anyone who wishes to ask a question may press star and one. As there are no further questions from the participants, I now hand the conference over to Mr. Venkataraman for closing comments.
Thank you very much, everyone, for all the piercing questions as always, and the encouragement given to the company and all of us. Thank you, and see you soon.
Thank you. On behalf of Titan Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.