We interacted with the senior management of Titan Industries (TTAN). While
conceding the near-term challenges, management is persisting with its medium-term
expansion plans and focussing on bottom‐line growth for FY13e.
Policy actions impacting; though not significantly: Government policy actions
(customs duty, PAN card restriction) have started impacting TTAN, though not
significantly. However, it is moderating the pace of shift from unorganised to
organized segment, of which, Titan has been a key beneficiary so far. According
to the management, absence of consumer demand in grammage terms,
particularly in the last six months, has been slightly surprising despite the
prevailing weak consumer sentiment.
Various plans to induce demand: On its part, in order to induce consumer
jewellery demand, TTAN is experimenting with an exchange scheme in some
states and intends to roll it out on a bigger scale soon. Currently, exchange
forms just 15% of the business and in the new scheme, it will accept even
Jewellery from other retailers with some carratage correction. As per
management, it will help achieve twin objectives: a) restrict cash outflow for
consumer and b) reduce overall Gold imports for the country. It may also
contemplate a cut in labour charge to drive jewellery demand.
Watches – expanding selectively: TTAN will concentrate its efforts around
Fastrack and Helios and will go easy on World of Titan expansion as it already
has a geographically strong 350 store presence.
Confident of achieving medium‐term target (US$3bn turnover by FY15e): Focus
for FY13e has shifted to bottom-line growth by cost containment (wherever
possible) and margin enhancement (direct Gold import will save 70bps). We
maintain ‘BUY’ with TP of Rs255.
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