Indian jeweller Titan misses Q4 profit view on higher discounts, gold prices

A salesperson arranges wristwatches inside Titan World showroom in Ahmedabad

CHENNAI/BENGALURU (Reuters) -Titan reported fourth-quarter profit below estimates on Friday, as the Indian jeweller offered big discounts on its products to attract customers amid high gold prices.

Analysts and traders said increased gold prices could dull demand during the wedding season in India, the world's second-biggest gold consumer, forcing many retailers to offer large offers to lure customers.

In an earnings presentation, Titan said that a soft demand environment due to "volatile and elevated gold prices" necessitated promotions to drive customer acquisition.

The discounts helped Titan attract more buyers to its stores and report a 19% increase in revenue in its jewellery business, which houses brands like Tanishq and CaratLane and makes up nearly 90% of revenue.

But the growth still fell short of the 23% growth it reported in the same period last year.

Overall revenue - including its smaller watches and eyewear businesses - increased 17%, while its expenses rose 18% due in part to higher gold prices.

Gold prices rose 8.2% in the reporting quarter.

That, coupled with bigger discounts, led to its earnings before interest and tax margin contracting to 11.1% from 12%.

Titan reported a profit of 7.86 billion rupees ($94.2 million) in the quarter ended March 31, up 7.1% from last year, but missed analysts' expectation of 7.99 billion rupees, according to data from LSEG.

Titan's shares ended about 1% lower ahead of results. So far this year, the stock has fallen nearly 4%, compared to a 3% jump in the benchmark Nifty 50 index.

($1 = 83.4030 Indian rupees)

(Reporting by Praveen Paramasivam in Chennai and Ashna Teresa Britto in Bengaluru; Editing by Varun H K)