Titan Company Stock Analysis

Short Stock Analysis of Titan

Introduction

The Indian Jewellery Industry went through a lackluster phase post the outbreak of the COVID-19 pandemic. However, things are taking a turn for the better and a full-fledged recovery is underway. With blockbuster demand amid the festive season and the IPO of Kalyan Jewellers coming soon, this sector has gained massive traction. In today’s blog, we present a brief analysis of the Goliath that rules the roost – Titan Company.

Titan Stock Analysis

Indian Jewellery Market

• The Indian Jewellery market is estimated at Rs. 4.5 Lakh Crore. Out of which, the organized market accounts for ~ INR 1.4 Lakh Crore (31.1%).

• Titan is responsible for 4% of the overall jewellery market. It holds a mega 12% market share in the organized segment followed by Malabar Jewellers (10%), GRT (9%) and Kalyan Jewellers (7%).

• Having said that, one thing that will make your jaws drop is that company enjoys a whopping 56% share in organised market’s profit.

• The fundamental cause for Titan’s dominance over its peers is that they have a robust EBITDA Margin of 12% as against jewellery industry margins at 4%

Titan- High Expansion Opportunity vs Other Discretionary Brands

• Titan has an aggressive expansion plan in place. Their target is the household segment consumer acquired by other discretionary brands such as Maruti and Royal Enfield.

• At present, Titan has 340 Tanishq stores spread across 211 cities. On the other hand, Maruti and Royal Enfield have 2390 and 921 showrooms  widely scattered around 1964 and 680 cities respectively.

• This simply goes to show the golden growth opportunity staring at Titan. Titan can comfortably open their stores in Tier 2, 3, 4 cities, further developing and diversifying their well-established strong franchise business model.  This trend will be clearly visible in the years to come.

• Currently, Titan draws only 22%-24% of its revenues from the wedding segment . It is influenced greatly by the unorganized jewellery market.

• The company’s Digital/Omni-channel Initiatives such as live video shopping, augmented/virtual reality and try at home implemented during the COVID-scenario make it better-placed versus peers to faster and gain market share.

Conclusion

Titan has observed good traction across all its businesses in the recent festive season. The jewellery business witnessed a mid-teens growth (around 15%) for the 30 day festive season starting from Dussehra till Diwali over the last year.

The management is optimistic and expect the vigorous demand trends to persist in the quarters ahead.