Titan (NSE:TITAN) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Titan Company Limited's Q2 FY 'twenty seven 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. Please note that this conference is being recorded. I now hand the conference over Mr. Ajai Chavla, Managing Director, Titan Company Limited. Thank you and over to you, Mr. Chavla. Thank you. Good evening to everybody on the call. Thank you for being part of this. It's been another very fulfilling quarter.

0:47 We've seen fantastic growth at a consolidated level across most of our brands and businesses and all of them clocking in very healthy growths, driven, of course, by a lot of focus on innovation and prioritizing growth over everything else given the opportunity that India offers. It looks like very exciting times for us despite it being a very volatile quarter in terms of some macros. But overall, a very, very good quarter. With that, I hand over to Ashok, our CFO, to share some opening remarks. Thank you, Ajai. Good evening, everyone.

1:32 I just thought I'll take this opportunity to clarify on particularly two items so that we all are on same page. One is related to custom duty gains. We continue to as we spoke after quarter one, this quarter also saw a good amount of custom duty gain, which was which is estimated at INR $4.90 crore for quarter two in Titan Jewelry division and INR 46 crore on Carrot Lane. Normalized margin, once you do adjustment for this on Titan jewelry business would be 11.1%. The other thing in jewelry, which we have spoken last time that a large part of MTM gain of quarter one reversed this quarter, which would impact jewelry margin by about 60 basis points.

2:31 And if you normalize for that, then TMZ, which is Titan Jewelry business margin would be 11.7%. Another important item, which is rather new on our P and L, On the face of P and L, we have disclosed it separately, is related to liability towards the second tranche for the mass acquisition. This amount is INR $6.71 crore. As per in the AS 109, any financial liability has to be fair valued at every accounting period. And with the current environment, when we looked at our liability at the end of four years, which was accounted for in our books of accounts at INR $16.68 crores, the reassessed liability is less by INR $6.71 crores.

3:32 Please note that this assessment will happen at the end of every quarter. And depending on the recovery trajectory of the mass, there could be pluses and minuses on account of this, but we will continue to disclose it separately so that everyone can understand the nature of that number and all other performance matrices are looked at normalizing for this adjustment. We continue to certainly believe in the long term opportunity that Damas represents. And we believe as soon as the geopolitical environment and the conflict situation improves, all the investments are in place to ensure that, that long term opportunity gets realized at the Titan Group level.

4:27 With that, I will open the floor for questions, and we'll be very happy to answer all of us are here to answer your questions. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question, they press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, The first question is from the line of Videsha Seth from Ambit Capital. Please go ahead. Hi. My first question was on domestic jewelry EBIT margin.

5:14 In case of, you talked about investments going to higher competition. So which price points or categories or regions is this persisting in? And when you talk about investments, are there any incremental schemes beyond the 0% reduction on old gold, or is it more from an ad campaign perspective? And just in continuation to this, even Carrotlane has seen pressure on margins from 10.2 in the base period to 6.5. So does the same competition argument apply there from the Challenger Daily Web brand or has it got to do with the festive shift? That would be my first question. So let me take this question and then maybe Arun and Songmin can add to that. I'm Ashok here. Since increase in custom duty made, the domestic market has been operating at a discount compared to international. I'm talking about gold prices.

6:10 And that leads to the gold price realization pressure. We also must understand that this is the second the other side of the coin. One side is the custom duty gain of INR $4.90 crore, and this pressure is the other side of the coin. So we are normalizing that gain completely, and we are talking this in isolation. Actually, we should look at both sides of the coin that we are gaining on custom duty, but there is certainly pressure on gold price realization because the entire market is doing that. As far as Carrot Lane is concerned, they have making a conscious choice to invest on brand building and some of the talent related investment.

6:56 And of course, the promotional offers, etcetera, were at elevated level in this quarter. But if you look at the entire H1 margin profile of Carrotlane, still remains healthy, still remains as per our plan that gradually their EBIT margin should start inching up from 8% to 9% and then further from there in next couple of years. But anything, Arun, so many want to add? No. So that's what if I don't know whether... Got it. That answers. The second one is if you can share your observations on the second gen consumer level trends during this festive versus last festive across all your consumer segments?

7:44 Okay. Arun here. I'll start with Tanishk Nia, Zoya. This year, Festive pretty much can be seen in three phases. The first phase of Navaratri from October 11 to October 22, then the second phase in between. And now we are in the last leg with Zanthera's tomorrow. So the first phase of Navratri, we saw good consumers positive consumer sentiments and good traffic to our stores. Pretty much from the day of Vijayadashmi for the next few days, there was some softness owing to gold rate volatility, which kept customers away. But pretty much from the last weekend, which was October 31, we have seen customers come back as we saw an all time low perhaps of the last many months, last weekend.

8:38 And also, at an overall level from the start of the festive season till today, gold is kind of softer, which is bringing back customers in. And we will see we hope to see a pretty strong ending to the season over the next few days till November 10. So a very strong start, a very expected strong ending, but a few days in between that were a little soft. On the qualitative side, I think it's been a good run on studded jewelry sustains. As you recall, this began for us pretty much the start of this calendar year. So we've seen three quarters of good studded growth, which continues during the festive as well.

9:27 And overall, it's been so far, there's been a greater demand for adornment and greater demand for core jewelry, while there's the softness on coins and investment buying sustains, which began in quarter two, which we saw towards August and September. We see that sustaining during festive as well, Although we see the peak of investment buying in the last few days, so we could see perhaps some greater interest today, tomorrow and through the weekend. But so far, it seems like a soft interest in investment buying and a greater investment in buying studded and gold jewelry. And just to add from Caraclyn, during the twenty four days of festive season, we barring for one week, I think we have seen a very healthy, healthy growth in terms of both revenue as well as buyer growth.

10:22 So tomorrow is really the day and hopefully things work out. Watches, generally, festive doesn't really do that well. But this time around, in October, we had pretty good growth, better than Q2. So momentum looks good. And particularly in the price points of 25,000,000 to 1 lakh, which is an area that we've been gaining share, we've done really well.

11:12 Eyewear is not driven by test tube. Eyewear doesn't have a test tube, so it may not be relevant. Thank you. Next question is from the line of Devanshu Bansal from MK Global. Sir, gold price has been on a dipping trend. The benefit in H2 will reduce further from gold price perspective. So wanted to check-in the interim, we did take some initiatives around light weighting, lower crediting, etcetera, and gold price was going up. So wanted to check if we can do some assortment correction to sort of build volumes when the gold price is sort of already thinned, if you could share some views on that?

12:06 Yes. I think it's a relevant question given this given that situation. And we've been working on 18 carat gold for core gold jewelry, both in wedding and daily wear and also 14 carat in Tanishka studded jewelry and up to nine carat in Mia. And so far, it's built a good catalog and a good availability across stores in the last nine, ten months, and it's growing at a very fast clip. And we are seeing good adoption by customers, both in traditional gold 18 carat as well as studded jewelry in 14 carat. Obviously, there's a geographic skew to that and some geographies are adopting much faster like the North and the West.

12:53 But overall, happy with the way the response customer response has been to lower caratages. Lightweighting, I think, has been there for the last two to three years. In fact, ever since COVID, we've been kind of focusing on making jewelry more accessible. And that's been an ongoing trend. And we're also adding things like detachables and multiple ways of wearing jewelry through modularity. So many things that are ongoing, but the results are quite satisfactory. Sure. Sorry, my question was can we think of reversing these initiatives because now the gold price benefit will be relatively lower and maybe we need to sort of increase volumes. So is there any thought process around going back to 22 carat sort of jewelry?

13:53 No, I think as a market leader, the objective is to give choices to customers and leave it to customers as to what to buy. And we have a very good assortment of 22 carats. So whatever we have done is without really compromising the core of Tanishq, and it's really an add on choice. And I think that's the fundamental role of a retailer to give choice to customers and then allow customers to choose what's in their interest. So I don't think we are trying to navigate the ship based on short term movements. And it's I think in the long run, it will help us be accessible. It will help us gain customer share, help us gain buyer growth.

14:41 So it's a strategic tool, which we think will give us a greater customer preference and therefore, not something to kind of chop and change based on movements in code rate. So it's a long term strategic decision we have taken and we'd like to stick with it. Got it. So just last one, bookkeeping. The Board has approved raising of INR 2,500 crore capital. So, OneLintec, is this restructuring or fresh capital that we are raising in the business? This is a replenishment of some of the existing borrowing. It is not additional borrowing. Got it, sir. Thanks for taking my questions.

15:27 Best of greetings. Thank you. Thank you. Next question is from the line of Mahesh Shah from Nomura. Please go ahead. Hi, sir. Just checking if I'm audible. Yes. You're audible. Good evening. Thank you for taking my question. Apologies if this is a repetitive question because I joined a bit late. Just wanted to check on the margin bit. I mean, there was an MTM impact that we had seen, which was going to have, you know, which would have actually impacted this quarter margin. So the 11.1 that we are seeing, is there any impact of MTM sitting out there? And if one has to strip that out, what is the level of margin that one can see?

16:13 So we answered actually upfront. And so we were saying that normalized for MTM is 11.7%. The other point since you asked it, I want to add, with the current the way gold price behave, the way our volume and forwards, futures, etcetera, valuation happens, it is kind of becoming that we must it has become part and parcel of P and L that 40, 50 basis point of MTM pluses, minuses will keep happening and we need to live with this. So this is the time leaving that we should not all the time be very worried about some of these things.

17:00 These 40, 50, 60 basis point MTM pluses, minuses will keep happening quarter on quarter. No. Absolutely appreciated, sir. I just wanted to understand because if your gold coin sales, which had become closer to mid teens, which is like a 2%, 3% margin business, if I'm not mistaken, has reduced in high single digits, You know, that actually gives a kicker to the margin profile so that we were... You know, one was hoping to see a better margin profile than 11.1 is why I asked that question. So in in continuation with that, given... I I think I I heard Arun mentioning that investment led jewelry demand is lower. So should one expect in the near term, at least because of this mix shift or mix change that we are undergoing in the near term, can one expect margin profiles to be that higher than the 11% mark that we have been doing?

17:56 I think we still, Neer, would like to anchor our margin target at around 11%. Growth remains a priority. As I spoke about in also that the way gold prices are behaving in Indian market because of various reasons, they are many times at discount to international prices. There are different kind of pulls and pressure in the market and which we also need to respond to. So we would not, as far as FY 2027 is concerned, change our stance on margin. Understood. Fair point. Secondly, on October sales, specifically not on the festive demand, I heard your reply on festive demand. But only on October sales, given that, you know, there will be a case of lapping of 46% base from going forward, how should one think about the buyer growth footfalls on the October demand?

18:54 You know, any color on that front actually will be very helpful. No, nothing that you should read for the month of October because it's not a like to like kind of base, and we'll perhaps update post at the next interaction to give you a longer term sense of things. Because of the shift, it's a significant shift. So yes. Any near term color, Arun, if you can share on how one should think about Q3, Q4 revenue growth momentum because of the base and the way gold prices are going down? No, I think really what is a priority for us, which we had mentioned also in the analyst meet, number one priority is to drive buyer growth, and everything we are doing is to drive buyer growth. The cushion that we may get on gold rate related ticket size is a little, let's say, external to whatever we do. And therefore, everything that we do is to do with driving buyer growth.

20:01 In quarters ahead, if we project that we may not get too much of cushion on the gold rate, we would step up our efforts to drive buyer growth. Having and particularly in the core jewelry without really worrying or focusing on coins and investment related purchases. So that's where our focus will always be. And in times when we don't get that cushion, we will work doubly hard to drive buyer growth. Like the first quarter was almost a doubling. Last quarter was a 47% jump in gold rate versus last year. This quarter, maybe in a single digit, the way things are going. So that puts a greater responsibility on us to drive buyer growth, keeping in mind the CAGR and the goal that we have set for ourselves, which is the longer term plan that we have shared with you all.

21:00 Understood. Fair point. No doubt. I appreciate that point. Lastly, if I can just quickly check on watch margins, I believe they were quite good. Any color you can share on the reasons for the drivers for the watch margin? And how should one think about... I mean, of course, this... Maybe these may not be sustainable ones, but maybe is is there a case for a near term sustainability of sorts on near term gross margins? Dineer here. This quarter, we've had a really good story on edge, driven partly by the Indian India Titan stories as well as the launch of good set of products that took price points up and therefore, margins up.

21:46 So that was beneficial. But even across the other categories, like I mentioned, the 25,000 and above price point sales was also really positive. So that is largely the reason for the better margin performance, and we certainly hope it will continue. Got it. Thank you very much, and wishing all the very best. Thank you. Thank you. Thank you. Next question is from the line of Jayadoshi from Kotak Securities. Please go ahead. Hi. Thanks for the opportunity. Two questions from my side. First one is, you know, the, you know, clear improvement in studied growth that you have seen during the course of this calendar year.

22:32 Is that a industry wide sort of, you know, phenomenon, or are you benefiting from diamond expertise center that you are setting up? Do you have any can you give us some color on that? No. I think to be honest about this, it is an industry wide phenomenon. And as you are aware, we are a low diamond penetration country. And perhaps over the last couple of years, the move was towards buying gold jewelry given the pace at which gold was appreciating. And from January of this year, we are seeing a secular trend where customers are demonstrating greater interest in natural diamonds.

23:17 And it's a month on month sustainable kind of track. But we think it's an industry wide thing. As far as the benefits of Diamond Expertise Center, it will play out over time. We have now reached about two fifty plus stores. So it's a longer term move, and it will perhaps play out or give benefit in the coming months. I'll add a flavor to it, Ajay here. I also believe as the country, we are young, a lot of young customers are entering the market. So we're seeing that reflect across the entire portfolio.

24:05 And younger segments are quite comfortable buying studded jewelry. That's the reading I would pick up. It may be a thin slice, but at least three, four brands that I see, there is a certain positive upswing. Therefore, Carrotlane is doing well, Mia is doing well and several other players are also picking up good volume. So that could be another force at play. Understood. Now on plain gold jewelry growth this quarter, it was a tad softer than what perhaps we were hoping for. So have you seen any slowdown or higher competitive intensity, any particular region that is dragging down the growth for you? Or was this 20% odd growth basically, I mean, slower growth in plain gold generally similar across all the regions?

24:57 Yes. No, I think it's an industry wide phenomenon. Many players have experienced similar softness in the last month of last quarter. And we saw that play out last year as well as customers wait for better gold rates given their understanding of how things may change closer to festive. So it's not to do with competitive pressure, but I think everyone has seen that softness in September. And if you knock off the coins part purely in core jewelry sense, perhaps it's a few percentage points better. And once you add coins to it, it looks the way it looks. And even if you see the WGC World Gold Council data for quarter two, you will see that there has been a significant drop as an industry on coins and bars. So you need to separate that out and perhaps it looks a little better.

25:56 But notwithstanding that, there has been, let's say, a pent up demand as we enter the festive season perhaps in gold jewelry. Sure. And one last one, if I may. Please go ahead. Yes, go ahead. Sorry, I'll get back in the queue. Thank you. Next question is from the line of Nihal Mahesh Shyam from HSBC. Please go ahead. Yes. Hi, team. Good evening. I had two questions. The first was on TMZ, our buyer growth was 5% in Q1. We've seen it obviously become flat. Just wanted to understand, is it because of the festive shift of the gold coin or your comments on it?

26:46 Both of that, Nihal, both the festive shift as well as the gold coin and investment buying, both have contributed. And has that then improved in the overall festive season in terms of buyer growth turning positive? Yes. I will say it's better than that, but a lot depends on these last few days. So I hope I can say that at the end of festive period. So do wish us luck on that. Sure, Will. The second question was that you've obviously seen the recent trends in terms of gold prices sort of being moderate. And, generally, we've always had this belief that customers come in with a certain budget when they buy jewelry. So as gold has sort of, you know, corrected, how are the bill values for customers sort of reacting? Are they up trending in terms of number of pieces?

27:41 Are they buying higher weightage jewelry? So how is the bill value sort of reacting to the customers that are interested? Actually, this has been a recent phenomenon during the festive period. So perhaps once it's over, we will kind of get into it and possibly answer you with greater accuracy because during the festive, we're not kind of a rush at this time, so we may not have analyzed that to answer your question with the depth that it requires. I hear you. That was it from my side. Wish all all the best and happy to work. Thank you. Thank you. Next question is from the line of Amit Parohit from Elara Capital. Please go ahead.

28:29 Hi, sir. Thank you for the opportunity. Just continuing on the buyer growth sales, I just wanted to understand between the standard, which has been growing pretty strong for us for the last couple of quarters. And I wanted to understand the consumer behavior more to put it in a way that if the buyer comes in, does the new buyer growth directly happens in the segment or he goes through a life cycle kind of a... That he first buys a plain gold jewelry and that gets into studded. What has been your experience for? Because we have been actually launching a lot of new products. Zoya has been pushed. So a lot of studded products I see that launches has been there.

29:15 Actually, it's a mix of both, Amit. Like Joy said, a lot of younger customers come in and make their first purchase as a diamond product, and it's across all three brands, Tanishq, Mia and Carrot Lane. But we do find a lot of traditional gold buyers also moving over to diamonds after having bought gold over a period of time, who tend to be slightly older customers. So we see both happening. But perhaps in a Carrot Lane store or a Mia store, a lot of the customers are first time diamond buyers. In Tanesh, it's a mix of the two. Okay. And just a follow-up on this. So last quarter growth, say, 30% in the studied business, there would be buyer growth in that segment or in the Tanishq part of the portfolio?

30:10 Or is it difficult to right now understand that? Over the last six months or so, the standard portion has been strong in the Tanish part of the portfolio. Would the... Is a fair assumption that buyer growth would be slightly higher in that versus Yes, the yes. Buyer growth is certainly higher in that segment. Okay. Okay. Thanks a lot. Thank you and all the best. Wish you a happy day. Thank you. You too. Thank you. Next question is from the line of Abhi Mehta from three sixty one Capital. Please go ahead. Yes. Hi, team. Thanks a lot for the opportunity. Just first question on the entry level supplement. I'm not sure it was covered. Sorry for that. But if you could give us a sense on whether there has been a change in that behavior where we were seeing demand kind of being a little muted, if that has changed because of the gold price correction, if you could kind of help us with that. And also, if the buyer growth how should we look at buyer growth when we are because as you rightly pointed out, we should look at it ex gold coins.

31:13 Buyer growth may not be the right factor then. Do you think EBIT growth is the factor, if you could kind of help us understand how do you look at this internally? Thank you. So from an operation standpoint, we'd obviously look at it as a core jewelry growth because that's our primary focus. And pure core jewelry growth in buyer terms and in value terms, That's the way that we look at it. The gold rate softening is a very recent piece, Abhi. So we'll also need some time to step back and see what's been the result of that. So do allow us some time to answer that question after the end of festive.

32:00 But the trend that you alluded to has been true in the last couple of quarters and prior to that as gold rates have been increasing. I'll just step in. There are quite a few questions coming from many of you saying, how should we think about growth going forward given gold prices have corrected. So if I were to take a shot at it, I would say that gold prices remain corrected and stable. The chances are we will see many more customers coming into the market, especially those who had stayed away. And therefore, I would bet on much healthier buyer growth than what we've seen in the past, perhaps compensating for some of the ticket size related issues that you might be anticipating because gold prices remain subdued.

32:53 The second piece I would say is new buyers, I don't think we should think about it as studded or gold. You didn't ask for this, but the previous gentleman asked for it. I would say new buyers typically enter in the lower price segments because they are below 50,000, below 1 lakh. And that's where you'll start seeing the spot whenever gold price is correct or whenever we are able to attract that customer with appropriate products in our catalog. It could be across Mia, Carrot Lane or Tanish. Got it, Ajay. So I mean that is the backdrop. I was essentially trying to understand that thesis is it panning out, but I hear you that we should wait for data to kind of pan out as we see. Got it. Wish you a happy Diwali everyone. Thank you very much. For this. Thank you. Thank you. Thank you.

33:45 You. Next question is from the line of Amit Sachdeva from UBS. Please go ahead. Hi, good evening, and thank you for taking my question. So Ajay, thanks so much for obviously addressing that question, but let me just start a bit of a thinking here. Say, Zoom, and perhaps correct me if I'm wrong, I heard Arun say that so far festive season has been a bit strong. And second, the buyer growth, which was muted in the festive season, it seems to be it has come back at the positive sort of zone. So my question is there are two parts to the problem. One is obviously headline price and value equation. But also there's a marketing part of it with users, obviously, perfected that over a period of time, how to sell to consumer, how to increase and influence the ticket size. I just want to ask a theoretical question.

34:33 Say the buying growth is 8% to 10% or say 7%, 8% in Q3 or Q4, for example, whatever, where the people are worried about the pace. Why is this possibility that where through the, you know, SK you want to sell, the way you sell to consumer, is there a way that you get confident that we can affect a bit of a 10% ticket size increase from the consumer point of view? Because there are ways to sell to the consumer and the ways to sell to their skills. There's a marketing element of it as well, which sort of you shape consumer behavior in that sense. So where I'm coming at is that if 8% to 10% viable is possible, can you still touch 'twenty kind of growth? Or it is still very difficult to ascertain given the mix of buyer will come? I just want to make sure what will give you confidence that the growth could come if the buyer growth is this level of threshold? I don't know whether it's a very theoretical question, but I would like to hear your thoughts on this.

35:34 Amit, I think that's really the goal that we have set ourselves that we need to grow at that rate that you mentioned a sustainable basis right through the years that we have set the goal for. And at times and heading forward, we it is possible that we may not get the cushion of ticket size growth and gold rate growth. So therefore, bio growth becomes the first and most important part of it. That apart, we look at the portfolio in its various parts. Wedding is one which gives us a higher ticket size, high value studies gives us a higher ticket size. Some parts of the Solitaire portfolio gives us a higher ticket size. And these engines, kind of rev up when there is a need, like you said, where bio growth is kind of comfortable and we need to step up the ticket size piece.

36:33 So in a sense, based on the situation and the reading of the situation, there is enough the portfolio is large enough for us to activate the parts which can give us what is required at that point in time. So we believe that Tanishq being a very mainstream and a brand that covers all need states, all types of customers and a very diverse price point, we have that ability to activate the right facet of the brand at the right time based on the building blocks or the levers required at that time. Got it. Very, very helpful, Arun. May I just ask that for accelerating the buyer growth, right, in this current environment, are there any specific schemes or any specific initiatives you've taken?

37:27 And which or are you planning to take which could spur the buyer growth that you will desire to come in that zone? So like Even last day, yes. Yes. So like was asked earlier, I think buyer growth for buyer growth to happen, a lot of we need buyer growth sub INR 1 lakh. And therefore, a lot of our efforts are to make jewelry accessible, give a lot of choice, sub INR 1 lakh, sub INR 50,000. And that's where lightweight jewelry, that's where studded jewelry in 14 carat, gold jewelry in 18 carat. All those efforts, what I had shared earlier are more strategic efforts to make jewelry accessible so that we are able to fulfill a certain need at a certain price point.

38:13 And all that will come in to bear to attract customers, a large base of customers who seek to buy jewelry for everyday use at that price point. So a lot of our efforts are going there in that direction. Got it. So much, Arun. Thanks so much for the questions and answers. Thanks a lot. Also, just to add, I may just add, two more things two, three more things that will help. One is the whole gold exchange program, which is a huge lever. And as you're aware, we've been at it for the last one year, and that's something that's giving us good results. Second is the whole network expansion and network upgradation.

39:00 As we've been underlining that we've been upgrading a lot of our stores, making them larger and far more attractive to expose all the facets of the brand. And second is, of course, the network expansion, adding more stores, both in same cities as well as adding cities to the network across all our brands. Thank you. Next question is from the line of Sameer Gupta from IFL Capital. Please go ahead. Hi. Good evening, everyone, and thanks for taking my question. Sir, first question is, I mean, a lot has been discussed around gold prices, but my question is slightly different. So we have seen this being flat for the past six months, more or less. And this would also imply that local or regional jewelers who don't really do hedging and where then sitting on inventory gains for a long period of time would not be able to pass on any gains to customers.

40:10 So competitively, we are better placed in such an environment heading into festive all else equal. Would this be a fair interpretation? Sir, okay. I sure care. Like if you think about the large organized player, everyone has a different level of hedging. Titan, of course, is a bit conservative on that front that we do. But the custom duty gain aspect is there since May, where many people must be sitting on gain, and we see aggressive promotions, discounts happening. So to that extent, I think that firepower is still there. It is just four, five months have happened. To my mind, another two, three months, you can see that behavior that they are still sitting on those gains.

41:03 But you are right. If the prices keep softening, our position would improve competitively vis a vis those small players. Market, I have spoken about that since custom duty increase, Indian domestic gold price market has been at discount, and that gives a hint that there are channels which are active through which also gold is flowing into the country. No one has a good correct estimate while news articles keep appearing around that. We don't know exact amount of that, but that's also something which is right now going on. But, sir, just to clarify here, the... That that duty cut... The the duty increase gain is available to you as well as others. In case of actual natural gold price, when players don't hedge and it goes up, that benefit is not available to you versus your competition. So technically, still it's a favorable competitive scenario.

42:02 That that is what I hint. That is what I told. It is a favorable scenario for them. Got it, sir. That's helpful. Second question is on this liability for Damas being reduced. Just wanting to understand, is it a result of our assumptions for the next three years? Or should we just treat this as a accounting integrity than a broad based impairment in value? No, this is basically accounting requirement. And of course, accounting requirement requires us to have a view on a probable performance for the next this liability is created in our books for the put option call, which is there at the end of four years.

42:49 So we need to take a complete view. And every quarter, as it unfolds, we will again sit down and look at what's going on and what is the view. So it is that four year total view of the likely probable performance. Accordingly, this accounting action has been taken. As a matter of prudence, account always behave a bit conservatively. I did not tell you guys, you understand. And sir, just to elaborate here. So if, let's say, you had acquired 100%, would you you... This requirement wouldn't have been there. So there would have technically been no impairment, or would you still would have gone ahead and looked at the geopolitical scenario and taken this impairment? So you are right. There are two sets of things, you know, which needs to be looked at. If I would have taken 100%, then there was no liability for me to pay in future. So that I would not have done, which I have done this time.

43:43 There is another part that this investment sits on our balance sheet. As an investment, does it hold its value or not, that impairment or maintenance of that value, in any case, has to be assessed all the time. But at this point of time, we don't see the long term opportunity of the market has diminished in any manner. And that is why there is no reason to impair that. Great, sir. Last question, if I may squeeze in with your permission. Yes, yes, sure. So, during the course of the call, we've also mentioned that new buyers are likely to pick up in a scenario when gold prices remain soft and it has been some time since we have witnessed such a scenario.

44:29 Would you say that the market landscape has changed a little bit given there is now a thriving LGD market and that is also likely to attract new buyers who are in that affordable segment? Or would you say that's an irrelevant point? Customers are still very different for LGD versus the entry level jewelry that a Tanishq or any gold jeweler sells? I don't think we don't believe that LGD, the base at which they are or the traction which that segment has gained is the reason for new buyers. Let's say new buyer growth to be what it is, it would be unfair to ascribe that as the reason.

45:17 Though the number of players are significant and there is a lot of visibility, but I don't think it's reached that level to ascribe a reason to that. Also, I would step in here, Raja here. I think to assume that only new people come in and buy LGDs may be inappropriate. I think LGD is currently at the early life stage of that category it is in. Enough and more existing diamond buyers are experimenting as well. So first of all, the size and quantum of what Arun mentioned is so small that it cannot move the needle at an overall industry level. Secondly, it is not just new and low price, it is also people who may be existing diamond buyers.

46:13 So it's too early to even come to that conclusion. Got it, sir. That's all from me. Thanks for answering all the questions and wish you all a very happy Diwali. Thank you. Wish you too. Thank you. Next question is from the line of Jayadoshu from Kotick Securities. Please go ahead. Hi. Thank you so much for giving me an opportunity here. My question is on competitive pressure. Now, Ashok sir, you mentioned that some of the local jewelers or jewelers who are sitting with pre custom duty inventory and inventory gains, that inventory will be sold in next couple of months. So do you see with that easing of competitive pressure?

47:02 Or you think that, you know, competitive pressure is, you know, for one reason or other likely to continue? And second is we picked up through some tags that smuggled gold is available at five, 6% discount to the market rate. Maybe some of the local dwellers may have access to it. So is that also a reason for competitive pressure that you are facing? Or is this the former one, which is more custom duty inventory gains? It is aggregating. This is extremely difficult, but these cycles, they have come and gone in our life, keeps happening in this industry at various points of time. And we have learned to navigate that successfully. So I think this time also it will not be a different story. We do see pressure tactically.

47:49 We respond to also that in different catchment the way if our competitive drillers are taking a particular posture. So I think we will keep doing that. Segregating that which element is causing this is very difficult. But Arun, Ajay, if you want to add anything to this. No. I think... Sorry. Sorry if I may just... You know, I have no doubt that your ability on... Your ability to navigate through this. I was just wondering that if gold price remain more or less range bound and if there are no inventory gains available to, you know, other dwellers, in that kind of a scenario, can FY '28 or calendar year '27 be a much better operating environment for you than what it has been over the past few years?

48:39 Our expectation is that at some point of time, government would also perhaps take a view on custom duty. And again, the way they have done and they will hopefully reduce that, So that, that gray channel attractiveness completely diminishes. And that environment is a good environment for us, and we will hope for that. You. Next question is from the line of Sabisachi Mukherjee from Bajaj AMC. Please go ahead. Yes. Hi. Thanks for the opportunity. Just one question. I just wanted to double click on this competitive intensity.

49:27 Well, I know, was this phenomenon very specific to any geography and specific to quarter two? Or are we seeing the same thing happening in quarter three as well? Okay. So, Savi and Sachi, I think it's our belief that competitive intensity is only going to increase. It's been at a certain level. And as you see what we see is there is a formalization of the industry, which is happening. A lot of organized jewelers are moving across their, let's say, where they began and moving into new geographies. So that's anyway a trend that will continue to be there for years to come.

50:13 And of course, you are also seeing smaller jewelers getting more active, like Ashok said, and discounting perhaps as a way to hold on to their customers when there is a formalization and there is a movement towards of customers towards bigger jewelers. So this is we our belief is this will be the case and we need to kind of keep strengthening our playbook to be able to deal with this situation. We believe we have been able to deal with it so far successfully, and we'll that resilience will continue to get strengthened to deal with it. So we don't see it being a geography specific thing, though there may be some pockets where there may be price warriors who may operate.

51:03 But it's something that will continue to be there as others also try to catch up with the network that we have built over the years. So one thing I will add to Arun's point and while some of you suggest us that should we relook at our margin guidance and we keep saying that we want to keep it anchored around 11%. Two, three things. One is, of course, Arun spoke about competitive intensity and sometime our need to respond to that. The other one also like it is not a foregone conclusion that gold will keep correcting or stabilizing here. There are conflicting opinions that gold might again start its upward journey. So given all those environment, we are saying that it looks like that we can confidently deliver margin, which is anchored around 11%.

52:00 And we don't want in a hurry to either change that. And I will wait for the full financial year 2027 to be closed and then rethink about what should be our margin going forward. Yes. Got it. Just one follow-up. I mean, if I look at the I mean, competitive intensity, has it kind of remained the same if I compare it with, let's say, the previous year or maybe in the last two years? Or has it become worse? Or what is the kind of intensity that we are seeing? Yes, I think, this is Ajay here. Competitive intensity is expected to continue to improve and increase all the time. More players will come, more people get capital, more people want to expand.

52:53 Somebody also talked about lab grown diamond players will come in. Everybody is tasting success in some form or the other. So if the industry is growing and people are continuing to do well, you'll get more money into the market. So I believe we should brace ourselves for continuous improvement or increase in competitive intensity. And I would it would be very theoretical to say whether last year was more or this year is more. Assume it is going to keep increasing, yes. And therefore, the context of what Saschaq said, our guidance on margins will not change based on our assessment of whether competitive intensity will go up or down. If it happens to go down, Insha'Allah, but I doubt if that's going to happen.

53:43 Thank you. That's all from us and wish you a very happy day early to the Titan team. Thank you. Thank you. Thank you so much. Wish you the same. One point, Ajay, if I can add at the end of this call for everyone, While I do understand that jewelry is a very, very dominant part of our portfolio and it takes all the financial performance. But if you I want to draw your attention for this quarter specifically where other than jewelry part of the Titan portfolio has done extremely well, and we are very happy and proud of that. Watch division, Eye Care division, our newer businesses, fragrances, fashion accessories, even Panera has started showing some promising green shoots.

54:31 Teal on the other side and international jewelry business on North America, they have been doing extremely well, and we believe that they will continue their growth trajectory, making a meaningful contribution to Titan consolidated performance. So I just wanted to draw your attention. I'm sure you take note of that. Just I thought it up from here. Yes. In fact, that was my concluding piece as well that there is growth across our portfolio. And you must remember, like we shared in the Investor Day that we have a flywheel, which is constantly adding a certain base of customers to our entire Encircle base from which every brand feeds off. So this flywheel has actually worked very well and buyer growth as well as healthy double digit business growth with accompanied by retail expansion is really kicking well. And therefore, you see a very healthy margin because the nonjewelry side of the businesses also bring with them much higher operating leverage.

55:38 So all in all, it's been a very good quarter, and we believe it should be a very good year too if things continue the way they are. You. Wishing all of you very, very happy Diwali. Please go out there and buy a lot of jewelry and other products for Tantiras. Bye. See you soon. Thank you. Take care, guys. Thank you very much. Thank you. On behalf of Titan Company Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines. Thank you.