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Glitters all the way…
We recently met the management of Titan Industries (Titan) to get an
insight into the company’s business model and growth strategy. Titan,
a joint venture between the Tata Group (currently holding 25.5%) and
the Tamil Nadu Industrial Development Corporation (holding 27.9%),
currently operates four business units viz. – jewellery, watches, eyewear
and precision engineering. The jewellery and watch business together
account for close to 96% of revenues. Titan enjoys a 35-40% market
share in the organised jewellery market and ~45% market share in the
organised watch market. With the increase in discretionary spending,
the long-term outlook for the company looks positive.
Volumes to lead growth
Titan witnessed a pick-up in demand for jewellery from H2FY10 owing to
stabilised gold prices and the onset of the festive season. Considering the
improving consumer sentiment, the same trend is likely to continue,
going forward. In the watches segment also, aggressive expansion of
retail outlets and new product launches will drive revenue growth.
Focused profitability enhancement
Titan is clearly committed to enhancing operating margins across
segments. While increased share of studded jewellery will lead to
enhanced margins in the jewellery segment, higher share of premium
watches sold will support the margin expansion of the watches division.
The newly launched eyewear business will begin to contribute positively
to the operating profit from FY12/13.
Retail expansion to further aid topline growth
Titan’s retail store count as on FY10 stood at 543. In line with the
company’s strategy to rapidly expand its retail footprint, it has already
added ~60 stores in H1FY11 and plans to add more stores across product
segments in H2FY11 as well. It also plans to leverage on the growth in
modern retail and plans to open shop-in-shop counters in leading
departmental stores.
View
Titan is a play on the Indian consumption story. Increasing disposable
income, higher aspirations of the Indian consumer and increased
preference for branded products augur well for the company. We believe
that Titan will be one of the beneficiaries of this Indian growth story.
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