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Indian jeweller Titan's profits jump over 50% when gold prices rise

Titan, an Indian jeweller and watches maker, reported a 52.5% increase in its first-quarter profits on Thursday. The company benefited from the higher gold price, even though budget-conscious customers chose lighter, low-carat designs.

Titan, the company behind the Tanishq jewellery brand and CaratLane, reported a quarterly profit of 10.91 billion rupies (almost $125 million), compared to a 7.15 billion rupies profit a year ago.

Gold prices in spot form rose by 5.5% during the third quarter. This continued the bullish trend fuelled, in part, by the flight of investors to safe haven assets as a result of the U.S. Trade War and Middle East tensions.

The company's overall revenue increased by 21%, to 148.14 bn rupees.

Titan said that even though there was no improvement on the number of clients, the growth in domestic sales was still "double-digits", citing higher prices due to consumers buying investment-grade coins and turning to lower-carat jewellery.

In a press release, Managing Director CKVenkataraman stated that "Consumer trust in gold remains intact as an adornment or store of value."

Titan's jewellery division, which includes the Zoya, Mia, and other brands, and represents 88% of its total revenue, saw a 19% increase in sales during the quarter.

Titan's EBIT margin (earnings prior to interest and taxes) improved from 9.8% one year ago to 11.8% today.

In February, the jeweller's chief financial officer had warned that Titan's target core earnings margin of 11%-11.5% might be threatened if gold prices continue to rise.

Watches, Titan's second largest segment, saw a 24% increase in revenue as wealthy customers chose premium timepieces.

C.K. Venkataraman, the company's Managing Director, said that the company was considering establishing a manufacturing facility in the Gulf to maintain low-tariff entry to the U.S. Market, where the firm has steadily expanded in recent years. Venkataraman said on Tuesday. Reporting by Praveen Parmasivam and Ananta Aggarwal in Chennai; Editing by Sumana Nady, Janane Vekatraman and Savio d'Souza

(source: Reuters)