For Titan, the jewellery business accounted for 84% of its total consolidated net income in Q2FY20.
Shares of Titan Company fell 9.96% on Wednesday to close at Rs 1,156, after the watch-to-jewellery maker lowered its FY20 revenue growth guidance for its jewellery business to 11-13% from 20%, citing higher gold prices and weak consumer sentiment.
For Titan, the jewellery business accounted for 84% of its total consolidated net income in Q2FY20. During the quarter, the company faced headwinds on account of hedging positions that matured in Q2. “Because of our hedge positions, we had to write back about Rs 120 crore of income on account of hedges that matured. The losses arising out of the hedges were because of a very sharp upside in gold prices in September,” said managing director CK Venkataraman.
Going ahead, the gold price hedge impact would continue in Q3 but would be much lower, the management said. “Typically, the hedge is for two months and there would be some impact in October. But I think it’s pacing out, because this is basically gold that we bought up to June which is getting impacted,” said Venkataraman.