Date 11/01/2025
Equity Research Stock Analysis
Titan Company Ltd.
Submitted By:
Sonal Sinha PGPBL/05/065
Sonali Patnaik PGPBL/05/066
Vinit Panchal PGPBL/05/067
Yash Mody PGPBL/05/068
Stock Analysis Report: Titan Company Limited
General Questions
A) Evolution of the Company
Titan Company Limited, established in 1984 as a joint venture between the Tata Group and the Tamil
Nadu Industrial Development Corporation (TIDCO), has grown from a watchmaking company to a
diversified lifestyle brand. Initially focused on watches under the Titan and later, Fastrack brands, the
company expanded into jewelry with Tanishq in 1994, and subsequently into eyewear and other
lifestyle products. Titan’s journey has been marked by a focus on innovation, quality, and extending
into retail with a vast network of exclusive stores across India.
B) Details of the Company
Management: Managed under the Tata Group’s governance, Titan is known for strong
leadership and ethical business practices.
Products: Titan’s product range includes watches, jewelry, eyewear, and other accessories.
Market Share: Titan holds a significant share in the Indian watch and jewelry market, being
one of the largest branded jewelry retailers in India.
Business Mix: Jewelry is the largest contributor to revenue, followed by watches and
eyewear.
Key Financials: Titan has shown steady revenue growth and maintains healthy profit
margins.
Key Competitors: Competes with local jewelers, global watch brands, and eyewear retailers,
with major competitors including Kalyan Jewellers, Malabar Gold, Casio, and Ray-Ban.
C) Details of the Industry
Industry Size: The jewelry industry in India is valued at 85.52 US Bn dollars, with significant
annual growth potential.
Challenges: Challenges include high commodity price volatility, regulatory changes, and
competition from unorganized sectors.
D) Compare Relevant Parameters Over the past 8-10 years, Titan has consistently increased its
market share and revenue, outperforming many peers. The company has expanded its retail
footprint significantly compared to peers like Kalyan Jewellers and has leveraged technology better
than traditional jewelers.
E) Analyse the Business Model
SWOT Analysis:
o Strengths: Strong brand equity, diverse product portfolio, robust retail network.
o Weaknesses: High dependence on the gold market, which is volatile.
o Opportunities: Expansion into tier 2 and tier 3 cities, increasing penetration of
organized retail.
o Threats: Economic downturns affecting luxury good sales, rising gold prices.
F) Consistent Outperformance Titan’s consistent outperformance can be attributed to its strong
brand reputation, diversified product mix, and successful retail strategy. Its competitive advantages
include a vast retail network, loyal customer base, and innovative designs. The company has also
created moats around its business through exclusive product launches and customer loyalty
programs.
G) Main Story for the Future The future for Titan involves leveraging digital transformation to
enhance customer experience, expanding into emerging markets, and continuing to innovate in
product offerings. Sustainability and ethical sourcing will play crucial roles in shaping consumer
preferences and company strategies.
H) Buy, Sell, or Hold Recommendation Given Titan’s strong market position, consistent
performance, and growth prospects, particularly in the jewelry segment, a Buy recommendation is
suggested. The company’s strategic initiatives to expand its digital footprint and enter new market
segments are likely to drive further growth, making it a promising investment for the future.
Specific Questions
1) Why did Titan start jewelry business?
Titan started its jewelry business by accident. They started this business in Europe to import quartz. It
started with the launch of Tanishq in 1994. The decision was primarily driven by the desire to enter
an industry that had significant growth and value potential, given the cultural importance of jewelry
in India. They identified Gaps in Indian market: Purity, Design and people in India also don’t mind
spending on gold.
2) Explain the mistakes made by Titan. How did they rectify it?
Titan made initial mistakes in its jewelry business of misreading the market's preference for
traditional designs and focusing initially on 18-karat jewelry, which was less preferred compared to
the more popular 22-karat gold in India. They also priced their products higher, which did not
resonate well with the price-sensitive Indian market. To rectify these, Titan shifted its focus to
include more traditional and cultural designs in its offerings, adjusted its product lines to include 22-
karat gold. They also enhanced customer trust by introducing karat meters in stores for purity
checks, thereby reinforcing their brand promise of quality and trust.
3) Explain the key features of the financials of Titan Company?
Titan has constant margin. It is the market leader in terms of Revenue generated. For inventory
management, it takes short term loan from Bank with interest rate of 1.5 to 2.6%. The advance taken
from customer and Golden harvest scheme is used to cover up the interest rate charged on the loans
for inventory management. This company proves that high D/E ratio is not always bad.
4) Compare and contrast Avenue Supermart and Titan company?
Consistent margins in both cases
DMart doesn’t do any advertisements, but Titan does
CLV is high for Titan but low for DMART
No of stores are low for titan: 480
Distribution network: Stores are owned by Dmart & rented by Titan
Both vertically integrated
Both are low margin business
Both are having strong bargaining power with supplier
5) Future prospects of Titan
Gold fluctuations won’t hurt the prospects of Titan because of fund hedged on gold harvest
scheme
Higher the sales, higher the inventory: More designs at disposal
If sales are decreasing, then it is a problem so ROE should not decrease
Fashion jewelry trend is going to be there so the sales will increase
LGD: lab grown diamond visually appealing than natural diamond but for investment it is not
a good option. So, it can be a threat for the company
Regulation is another risk: eg don’t give this loan on gold. Bank is also making money. Top
jewelry players have influence on the government so it might not happen
Loyalty or stickiness are very important towards the brand
