Due to the pandemic situation of Covid-19 in the country resulted in a huge loss for Titan Company. Last Monday it was reported that a net loss of Rs.270 crore at the end of June 2020 against a high profit of Rs.371 crore in 2019. It was identified that the critical situation of Covid-19 affected the global economy. Its operating revenue has also declined by 62percentage by year to year.
Titan indicated that how the revenues had ended up for the pre-earnings update. The following loss was extremely higher than the expectation of analysts. The pandemic situation affects every industry including jewelry and watchmakers. They have a profit of Rs.1,862 crore, from Rs.4,939 crore a year before. These all are against the analyst projections. The company has the opinion that the revenue included the sale of bullion which values Rs.601 crore to reduce the inventory given from the low sales due to the pandemic situation. The wholesales of the company have negatively affected due to the lockdown.
The revenue started to increase followed by the recovery rates. As of June, it was 21percentage for the watch and wearables division and 77percentage for the jewelry division and 25 percentages for the eyewear division. Comparing with jewelry division and watches business, jewelry division recorded that an income of Rs. 1,783 crore from the quarter of 2020 against with Rs.4,047 crore on last year. So there was a sharp decline in 56percentage.
When connecting with watch business it shows that an income of Rs.75 crores against Rs.715 crore in the last year, here also a sharp decrease of 90 percent. It was clear that the eyewear industry also affected severely in the limelight of lockdown. When considering with accessories and Indian dress wear shows an income of Rs.4 crore against Rs.36 crore.
C.K Venkataraman, Managing director of the company said that due to the pandemic situation it was negatively impacted by the company’s performance which resulted in an unpredictable loss for the business. He expected to get back the jewelry business by the fourth quarter of the year.
The Titan management said it is targeting for a complete recovery in the jewelry segment by the march. It all depends on customers’ response towards rising gold prices and also connecting with the wedding season. However, the valuations of the company are not cheap According to the Bloomberg data, the stock trades at 49 times estimated earnings from the coming financial year 2022.
