Titan Company – India’s most trusted Jewelers

“The year gone has witnessed several firsts in the history of Titan. The Jewellery, Watches & Wearables and EyeCare achieved landmark milestones of ₹30,000 crores, ₹5,000 crores and ₹1,000 crores of annual consumer retail sales respectively for the first time in their retail journeys.“

– CK Venkataraman, Managing Director

Stock data

Ticker	TITAN
Exchange	BSE and NSE
Industry	Diamond, Gems and Jewelry

Price Performance:

Last 5 days	+0.87%
YTD	+11.23%
Last 1 year	+29.8%

Company description:

Founded in 1984 as a joint-venture between TATA Group and Tamilnadu Industrial Development Corporation (TIDCO), Titan Company Ltd is among India’s most respected lifestyle companies. It has established leadership positions in the Watches, Jewellery and Eyewear categories led by its trusted brands and differentiated customer experience.

Business verticals:

1. Jewelry:

The company is the largest jewelry retailer in the country with manufacturing facilities located in Hosur, Pantnagar & Sikkim It sells jewelry through its brands Tanishq, Zoya, Mia & Caratlane. The Company significantly added to its retail network presence, both in India and overseas during the fiscal year. Jewelry (Tanishq, Mia by Tanishq & Zoya) added a total of 97 stores in FY23 taking the total count to 541 stores spread across 253 cities (including 7 international stores in Dubai, Abu Dhabi & USA). The company owns 72.3% economic interest in CaratLane which makes it a majority-owned subsidiary. Caratlane created a record of 84 store additions in FY23 with presence in a total of 222 stores spread across 88 cities pan-India. 

2. Watches and Wearables:

The company is the world’s fifth largest and one of the largest watch players in the domestic market. It owns several brands such as Xylys, Nebula, Titan, Fastrack, Sonata & Favre Leuba. It also has a joint venture with MONTO BLANC & possesses licenses of several international brands such as Tommy Hilfiger, Police, Anne Klein, Kenneth Cole & COACH. 

It produces watches from its facilities in Hosur, Roorkee, Coimbatore, and Sikkim. Watches & Wearables (Titan World, Helios & Fastrack) while adding 162 stores for the year, crossed an important milestone of 1,000+ stores presence. The total store count now stands at 1,005 stores spread across 306 cities.

3. Eyewear:

The company owns several eyewear brands such as Titan, Fastrack & Glares and has a manufacturing facility for manufacturing frames & production of lenses located at Chikkaballapur, Noida, and Kolkata.  EyeCare significantly accelerated its network reach adding a record 168 stores (Titan Eye+, Fastrack) for the year and taking the total count to 901 stores spread across 352 cities. 

4. Others:

The company also has a small presence in the fragrance market through its brand SKINN whose perfumes are produced in France. They are sold through key departmental store chains and e-commerce. Its youngest brand, Taneira, started in 2017 and is involved in the business of sarees. Taneira expanded its presence to cover newer cities and added 21 stores ending the year at 41 stores spread across 22 cities.

Financials:

What we like:    

1. Strong Brand building capability with leading brands such as Tanishq aids in building consumer trust: 

Titan’s vast experience with its legacy brands like Tanishq and Titan watches has played a vital role in building other emerging brands. Tanishq has a widespread network operating through 404 towns stores as of Q4 FY23. Other business divisions have witnessed strong upswing across brands and perceive a huge growth opportunity on the back of robust growth in retail expansion, omni – channel expansion and impressive product innovations. 

2. Robust distribution network:

Titan has a very strong presence in domestic as well as international markets. As of Q4 FY23, Titan is present in 404 Towns and has a total of 2,710 retail stores across business segments. The Jewelry business operates through a total of 763 stores in 253 towns. Tanishq has a total of 6 international stores. Watches segment opened 21 new stores of Titan World, 16 of Helios and 15 in Fastrack as of Q4 FY23. Titan Eye+ has a presence in 901 stores in total including 1 store in Dubai and a town presence of 352 towns. 

3. Pivot in new emerging segments with Brands Taneira, Skinn & Fastrack: 

Titan has strengthened its core business of Jewellery and Watches whilst pivoting its focus onto other business segments and building solid brands like Taneira, Skinn, and IRTH. Taneira is positioned as an Indian wear specializing into Sarees from across India. Skinn & Fastrack are the major brands offering perfumes at attractive price points. Fastrack has made its entry in accessories through Women’s Bags as a strong focus area. Titan’s has forayed into the premium women’s bags category with brand – IRTH.

4. Moat:

After the Gitanjali gems fiasco people realized that after paying lakhs for diamonds they have been sold pieces of glass. This is the time when even the middle class and lower middle class people started sticking to the trusted brands. Tata being a conglomerate that has been present in India for years has never compromised on its trust factor and hence trust which is also the most important trait in the jewelry business is the moat of Titan company.

Factors to consider:

1. Current inflationary and recession scenarios can impact demand. 
2. Significant increase in gold prices can impact volumes.
3. High competition from other organized players can create pressure on growth and margins.

Future Price Triggers:

1. Robust balance sheet and asset light distribution model have enabled it to outpace peers in terms of store addition.
2. Aspires to grow jewelry revenues by 2.5x by FY27 (implied CAGR: 20%). Huge headroom for growth with current market share at ~7% in ₹4 lakh crore market.
3. Thrust on the wedding space is bearing fruit with wedding jewelry becoming a critical growth driver while its share in overall jewelry revenue has increased meaningfully.

Industry Analysis:

The Gems & Jewellery Industry contributes a sizable ~7% to India’s GDP and 10-12% share in the total merchandise exports. This industry is highly fragmented and unorganized with over 90% of jewelers are family-owned businesses. Titan has a market share of about 5%-6% being one of the key players in the industry. According to the MMR study report, the Indian Gem & Jewellery market was valued at US $25.30 bn in the year 2020 with a CAGR of 18.46 % over the past five years and total revenue is expected to grow at a rate of 21.35% CAGR from 2021 to 2027, reaching almost US $98.04 bn in 2027.

In October 2022, India’s Gems and Jewelry exports were at US$ 1.48 bn. The Government of India is aiming at US$ 70 bn in jewelry export in the next five years (until 2025). The significant growth is primarily expected because of high gold costs. Moving consumer inclination towards light weight & fusion jewelry has carried down the regular ticket size of jewelry buying by over 19 % in the past 5 years, while the volume of the industry has almost doubled. To provide this lightweight consumer segment, makers are gradually accepting a mix of machine-manufactured & handmade jewelry. The local market has also developed in current years to the point at which India is now the world’s 3rd largest customer of diamonds, accounting for just over 8 % of worldwide sales.

The global watch market is projected to grow from US$ 62.8 bn in 2021 to US$ 78.2 bn by 2026 at a CAGR value of 4.8% between 2021 to 2026. Watches have become one of the most common fashion accessories worn by men, women, and children alike. The growing demand for fashion accessories among the younger generation, combined with the rising levels of disposable income have been the major contributors to the growth of the global watch market. The technological innovations in the wearable industry have played a pivotal role in the development and launch of new products. New product launches by key players, such as Titan, Sonata, and Rolex, are anticipated to have a positive impact on the industry growth. In addition, companies are offering limited edition watches with various designs as well as features to increase their revenue.  The online channel segment is projected to expand at the fastest CAGR of more than 5.05% from 2022 to 2030. Consumers use online channels to purchase premium products on account of favorable value-added services.