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Often called India's Warren Buffett, ace stock market investor Rakesh Jhunjhunwala , who died in August last year, had more than three dozen companies in his portfolio. He was described as an investor who had a Midas touch. The stock that exemplified his Midas touch the most was watch and jewellery maker Titan, part of the Tata conglomerate. Acquisition of Titan Ltd. shares was among his most profitable investments.Jhunjhunwala placed his bets in early s on the Tata Group firm that predominantly made watches and was struggling with labour issues. When he passed away last year, the stock had surged more than 26,000% since the start of . Now, Jhunjhunwala's wife holds nearly 5.1% stock in Titan, which has become India&#;s biggest jewellery firm.Titan on Tuesday crossed &#;3 lakh crore in market value. It became only the second company from the Tata Group to cross a valuation threshold earlier breached by Tata Consultancy Services ( TCS ). Titan is also the second company in the retail sector, after DMart's parent Avenue Supermart, to surpass this benchmark.Titan, a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation, is active in several businesses such as jewellery, eye care, fragrances and fashion accessories with brands that include Tanishq, Mia, Zoya, Fastrack, Sonata, Eyeplus, Taneira, Skinn and Caratlane. The jewellery division accounts for nearly 90% of its revenue. Titan Company 's MD CK Venkataraman had said that Jhunjhunwala's reason for staying invested in Titan was the fundamentals of the Tata company , which continue to be strong. However, a sharp-eyed Jhunjhunwala must have noticed the real secret behind Titan's success: a rising Bharat.Titan, which reinvented itself from a watch brand to a jewellery brand, straddles two different narratives, the traditional and the contemporary, both converging in the recent rise of India which now aims to become the third-largest economy of the world.Firstly, by getting into the gold business, Titan plunged itself into a sector where demand rarely slackens for long, supported as it is by numerous festivals that occur all through the year in India as well as the famous big fat Indian wedding when people splurge on gold. Both these factors keep the gold demand up in the country. What worked for Titan was its creation of a credible brand, Tanishq, in a sector which has been largely informal. Titan found a veritable goldmine in the jewellery sector by riding on the trust that a Tata brand evokes.Secondly, Titan was able to establish a premium jewellery brand in Tanishq just when the premiumisation trend started in India's consumer market a few years ago. Premiumisation was accompanied by a sister trend, the rise of Bharat, the sudden manifestation of huge appetite for premium products in small towns of India where people had conventionally pinched pennies."Smallest of towns are witnessing booming business," Venkataraman had told ET last year. "There is a fair amount of money in small towns and the number of choices in small towns is less, unlike in the big cities where you spend money on going to restaurants. All that money is available to buy things. We are betting big on Bharat, even though we are betting big on India." Currently, 60 percent of the company's workforce is based in the metros and sizable 40 percent in tier II and III cities.Inflation, the bane of retailers in India, and the tough issue of pricing, do not affect Titan's premium and luxury business as much as they impact other retailers. Venkataraman had told ET that the customer base of Titan is the top half of the income pyramid of the country, and in that segment inflation has little role to play. There has also been a negligible impact on pricing of Titan's product.Titan caters to customers who are sitting at the top of the income pyramid and who are typically called the aspirers, the affluent and the elite. "Our business is entirely dependent on these segments and therefore our ability to extract higher and higher prices through a much more exquisite necklace or a much more stunning watch or a much more stylish frame and much higher quality lens continues," Venkataraman had said.Fluctuating gold prices do not result in sharp swings for Titan. "What happens is that the commodity prices are passed through in the sense that the store of value keeps increasing," Venkatraman said. "Also, as the price of gold rises, the rate at which consumers can exchange their gold with the brands they buy from rises. So inflation is not really the same in gold as it is in every other category. So that is not an issue."In nutshell, Titan brought the power of a prestigious brand to an informal sector where demand exploded due to growing consumer appetite for premium products, especially in small towns, where a brand like Tanishq evokes trust in a business that has always run on trust.Titan's optimism stems from the fact that India is among the fastest-growing luxury markets globally and is forecast to be around $8.5 billion this year, and some estimates say it will grow to $200 billion by . With the number of HNIs growing very fast, it expects the demand for its luxury business such as Zoya to grow.The overall competitive intensity in the jewellery business has increased in the last three to five years but what is also simultaneously happening is that the total share of the organised sector within the jewellery industry is dramatically increasing. "In every city, in every town, people are wanting to buy brands. Some of them will end up buying brands, which are our competitors, some of them will end up buying Tanishq. Therefore, the overall opportunity for the branded segment is exploding and we cannot at all underestimate the power of the Tanishq brand," said Venkatraman.Titan is on a growth binge, adding stores at a breathless pace as well as hiring big. The company on Tuesday said it is planning to add more than 3,000 employees in the next five years across domains including engineering, design, luxury, digital, data analytics, marketing and sales among others.Titan says it is embarking on an exciting journey towards becoming a Rs 1,00,000 crore business in the next five years. Consolidated total income of the company for FY23 stood at Rs 40,883 crore over Rs 29,033 crore in FY22 while its consolidated net profit rose 49 per cent at Rs 3,274 crore as against Rs 2,198 crore in -22.Besides sharpening its focus on luxury, Titan is planning to expand its international footprint in North America and the Middle East and increase its international workforce by 10 per cent over the next five years, with a specific focus on the Gulf market, where around 150-200 new positions will be created in the next two-three years.A big reason behind Titan's foreign expansion is the Indian government policies. There is a duty on gold in India. It is cheaper for NRIs and PIOs to buy gold outside. As a result, Titan management thinks sales per store in Dubai or the US would be approximately double that of Indian stores. Therefore, if Titan opens 20 stores in the US or Dubai, that would technically mean that those 20 stores would yield a revenue equivalent to 40 stores in India.Before entering the US market in February this year in the very heart of the diaspora in Little India of New Jersey, Tanishq spent two years studying the North American jewellery market which is considered to be $60 billion and that within the Indian Americans is $3 billion.The watches and wearables business had a very ambitious target of Rs 10,000 crore revenue at MRP by FY26 and Titan says it is on course for that. "In fact, we crossed the Rs 5,000- crore mark in FY23. The wearables business has taken off. We have done many things right in the last 24 months and in the last 12 months including reorganising, getting in talent and all that. The results are very much there to show and stay," Venkatraman had told ET."As far as the eye care business is concerned, the last two-three years were spent substantially in transforming the operations of the business and you will see quarter on quarter results barring a Q4 of FY23 where we deliberately decided to invest in certain parts; in employees, in the company stores as a leap forward in FY24 and in partners barring that, every quarter we have delivered exceptional results," he said."Now, in FY24 and FY25, we are focusing big time on the market share here as well as it is very, very low. It is at best in the high single digits and we are unique in the part of the business where we play so watches and wearables and eye care, not only are the dreams big, but the positioning is very, very strong."A key risk for Titan is India's current account deficit (excess of imports over exports). India&#;s largest imports include oil and gold. Oil is an essential commodity and its import cannot be lowered. Therefore, to contain its current account deficit, the government&#;s only choice is to curb the import of gold. For example, in , the RBI issued a circular stating that companies cannot procure gold on lease, which had impacted Titan&#;s core operations.
Mumbai: Jewellery and watch retailer Titan Company is looking to expand its market share in the jewellery business by ramping up store count by nearly 40% to 1,250 across its jewellery brands by FY27, the Bengaluru-based firm said.
It currently has current 900 stores.
For the jewellery division, the company&#;s largest, it plans to boost its buyer base to 6 million from 3.8 million now, and improve its market share to about 10-11% up from 8.6% while maintaining a revenue CAGR of 15% to 20% by FY27, the company said in an investor presentation released on 31 May.
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To be sure, the company's market share in the jewellery category has nearly doubled over the last five years, growing from 4.5% in FY19 to around 8% in FY24.
Titan Company's jewellery division comprises its flagship brand Tanishq, apart from Zoya, CaratLane and Mia by Tanishq. For the full fiscal year ended 31 March , the division recorded a total income growth of 20% to &#;38,353 crore.
Currently, Titan operates 464 Tanishq stores across 270 towns. In the past three years, it has added 110 new Tanishq and 140 Mia stores. CaratLane's goal for FY27 includes expanding to 425 stores in more than 200 towns; it currently operates 272 stores. The company also plans to double its revenue for its lightweight jewellery brand Mia over the next three years.
For the jewellery division, it plans to expand its margin in the range of 11.5%-12.5%.
Meanwhile, the company also outlined plans to triple volumes in emerging business such as wearables, women&#;s bags and ethnic wear by FY27, the company said in the presentation. In the mid-term it is eyeing growth rates of 30-40% for the emerging business.
Over the medium-term the company has kept a guidance of achieving 15-20% growth for its core-business (jewellery, watches, eycare) and 30-40% growth for the emerging business&#;wearables, Taneira (ethnic wear brand), international, fragrance and bags.
The company&#;s plans come as it has undertaken measures to improve footfall and product range across categories such as eyewear and ethnic wear divisions.
For its eyecare division it has set a target to achieve a top line of &#;2,000 crore by FY27 with an 11-13% Ebit margin. In its presentation, the company said it is planning a bigger play in the sunglasses market apart from bringing price parity in the affordable fashion and economy eyewear segment, and focusing on the top 108 stores. In FY24, the company&#;s eyecare division recorded a total income growth of 5% to &#;724 crore.
&#;Titan is launching premium sunglass retail under a new 'Runway' format and revamping its store layouts, with high-end stores requiring an investment of &#;3o lakh each. Titan is investing &#;30 crore in capacity and backend operations and plans to open 4-6 'Runway' stores in FY25,&#; analysts at Motilal Oswal Financial Services said in a report on 1 June following the analyst meet.
Similarly, for its women&#;s ethnic wear brand Taneira, the company has outlined plans to make it &#;1,000-crore business by FY27. The format operates 74 stores at present. The company plans to operate 180-200 stores by FY27, Mint had reported earlier this year.
Analysts at Motilal Oswal said the retailer remains optimistic about sustaining growth across segments.
&#;In the long term, the company&#;s diverse portfolio instills confidence in sustaining healthy growth with structural drivers such as the expansion of target users in rising urban cities and the potential of the store network, Titan&#;s expanding customer base (new buyers contributing 45-50%), apart from multiple jewellery brands catering to consumers across income groups; the rapidly changing consumer preferences further potential for market share gain (currently at 8%), and the increasing number of women and young people entering the workforce,&#; they said.
For FY24, Titan Company's total income grew 23% to &#;47,501 crore. Consolidated net profit rose 7.4% to &#;3,496 crore.
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