Titan Company has come a long way from pioneering in just branded wrist watches to creating an empire with several businesses (Jewellery, Wearables, Fragrances, Accessories and Ethnic Wear) under its roof.
Titan's roadmap for long-term success: Bolstering core business' growth along with focus on emerging brands
The company has reported decent numbers in the latest quarter with a YoY growth of 13.4%, clocking in ₹ 11,383 crore of revenue. Total income increased by 11% YoY comprising of 9.5% YoY growth from India operations.
A healthy festive consumer demand helped domestic retail (secondary) sales clock 15% YoY growth. Average ticket sizes saw steady improvement over same period last year.
The festive season saw healthy growth in walk-ins with stable buyer conversions. Contribution from high value purchases increased in the overall pie; larger price bands exhibited faster growth than entry ticket-sizes, particularly in the studded category.
Sales contribution from Golden Harvest (GH) program has reached pre-Covid levels; the GH enrolments witnessed healthy double digit growth in the quarter.
Division continued to invest in pursuing market share growth through high visibility marketing, inventory infusion and competitive offers/ pricing and augmenting digital capabilities and strengthening talent to enhance competitive advantages for the future.
EBIT came at ₹ 1,236 crore, clocking a margin of 13.0%.
Also, Tanishq opened its first boutique store in New Jersey, USA, in December 2022, taking the total international count to 6 stores.
Continuous traction in the project pipeline
In Q3FY23, the company acquired 28 new customers in its telecom segment and received ₹68 crore worth of orders from global participants, government agencies, public and private sector entities. Also in the consultancy segment, it received 2 new orders at the international level and 5 new orders at the domestic level. Moreover, smart metering is expected to have a potential opportunity of 25 cr meters or approximately Rs. 1,50,000 crore.
Strong brand building capability with leading brands
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 wide spread network operating through 411 stores as of Q3 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.
Robust distribution network
As of Q3 FY23, Titan is present in 406 towns and has a total of 2,537 retail stores across business segments. The jewellery business is operating through a total of 685 stores in 247 towns.
Tanishq has a total of 6 international stores. Watches segment opened 24 new stores of Titan World, 17 of Helios and 7 in Fastrack in Q3 FY23. Titan Eye+ has presence in 858 stores in total including 1 store in Dubai and a town presence of 354 towns.
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 the accessories through Women’s Bags as a strong focus area. Titan has forayed into premium women’s bags category with brand – IRTH.
Titan’s product portfolio played a vital role in its robust revenue growth. With newer businesses gaining momentum, the revenue mix has improved with jewellery contributing 89%, watches & wearables contributing 7%, eye care clocking in 2% and other emerging businesses contributing 2%.
Strong margin expansion capability and availability of free cash flow for business expansion
Titan has portrayed robust revenue growth with total income growing at a healthy CAGR of 14.6% from FY18 to FY22 ( ₹ 16,245 Cr in FY18 to ₹ 27,988 Cr in FY22) with YoY growth standing at 37% in FY22. The quarterly performance was decent with total income standing at ₹ 11,294 crore in Q3 FY23, up from ₹ 9,983 crore in the previous year. The PBT slightly declined at ₹ 1,245 crore during the quarter from ₹ 1,344 crore in Q3 FY22.
Titan is also set to explore the space of lab grown diamonds by acquiring a minority stake in Great Heights Inc. (through its wholly owned subsidiary TCL North America Inc.) to deepen its understanding of the “Lab Grown Diamonds” space. This proves Titan's ability to adapt to changing environment and being updated with innovations. As part of the Union Budget, Finance Minister Nirmala Sitharaman had announced several initiatives for the lab-grown diamond industry.
Shuchi Nahar is a Certified Research Analyst. She can be found on Twitter at @shuchi_nahar
Note: This article is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related investment-related decision.
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