Titan Company - Evolving With Times; Visit Note :: Edelweiss

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Our recent meeting with Mr Bhaskar Bhat, MD of Titan Company (Titan) bolsters our confidence that Titan is well placed to be ahead of curve in its offerings. The company will benefit from gold on lease coming back. It has also revised the minimum monthly installment of the revised Golden Harvest Scheme (GHS) to INR2,000 from INR5,000 to make it more appealing to consumers. Titan is gearing up to counter the e-commerce threat with its omni-channel strategy and tie-ups with many online players. The company is laying more emphasis on digital and e-commerce in jewellery for working women wear (like Mia) than on traditional categories like wedding or high-value ornaments. Accordingly, it is levering the digital platform to enhance consumer convenience and experience. In our view, Titan is one of the best plays in the discretionary consumer space.

Well-strategised to drive future

Titan continues to evaluate opportunities and has chalked out a five-year strategic plan to drive future growth. The company’s omni-channel strategy will ensure its presence across channels. It is already present in e-commerce through its own website and tie-ups with many online players. Titan’s central e-commerce team and segment-specific e-commerce strategies are also geared to combat emerging online competition.

Regulatory headwinds largely behind

The RBI has given the nod for re-introduction of the gold on lease model. Though come back of gold on lease will not materially change Titan’s cost of debt (had reduced costs to 3-4% due to international hedging), it will provide a natural hedge and lower debt. Any reduction in customs duty on gold will reduce smuggling, but could negatively impact players in the near term as they will need to book inventory losses.

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