Titan: Strong growth ahead

Titan is one of India’s top retailers with a strong presence in discretionary product categories such as jewelry, watches, and eyewear. The company is one of the top brands in the watches segment; while in the jewelry space, it is gaining good acceptance because of the shift from non-branded to branded space and expansion in middle-income towns. The company endeavors to grow by 2.5 times by FY2023 in its jewelry business.

In Q4FY21, the revenue of Titan’s jewelry business declined by 4% y-o-y. In January 2022, the Jewelry business saw subdued activity in top cities due to the Omicron wave, a very strong resurgence was observed in February, and again a drop in customer purchases in March due to the sharp rise in gold prices and sentiment impact because of the external geopolitical conflict. 

While walk-ins saw a minor decline, customer conversions and ticket sizes grew marginally for the quarter on a y-o-y basis. Sales from the top eight cities grew in single digits, while the rest of India saw some decline. Though the plain jewelry category bore the brunt of gold volatility in March 2022, leading to a slight decline for the quarter, studded sales reported high single-digit growth, thereby partially cushioning the impact. 

Jewelry:

In March 2022, Tanishq’s Rivaah wedding jewelry collection ‘Romance of Polki – a singular charm of uncut diamonds adding a new life to a bride’s trousseau, was launched for the upcoming wedding season. Mia by Tanishq’s new collections of ‘The Cupid Edit’ and ‘Kiss of Spring-2’ focused on events of Valentine’s Day, Women’s Day, and Mia’s 10th anniversary. 

During the quarter, the company acquired 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. Store expansions continued as per plan with the commissioning of 7 new stores in Tanishq, 8 in Mia by Tanishq, and 1 in Zaya. At the quarter-end, Titan had a total of 444 jewelry stores.

Watches:

Growth momentum continued in the watches and wearables segment. The watches and wearables segment registered 12% y-o-y revenue growth during the quarter amidst a challenging external environment with sales increasing across all offline channels because of the Titan brand. Sales from retail and large format stores (LFS) reported higher growth followed by trade. Western and northern regions saw much higher growth among geographies. Titan’s new analog collections of ‘Octane Aerobatics’ (eight mechanical variants), ‘Ladies Edge’ (six variants), and ‘Unending Beauty’ (11 variants); Fastrack’s ‘After Dark’ (nine variants); and Sonata’s new collections of ‘Versatyle’ (10 variants) and ‘Women of Steel’ (15 variants) were well received. 

The smartwatches and hearables segment saw significant growth in the 4th quarter with new launches across ‘Titan Smart Pro’ (six variants), ‘Fastrack Reflex Vox’ (four variants), and ‘Reflex Tunes- FT3’ (four variants) evoking a lot of interest and excitement. Store expansion continued with 24 new stores in Titan World and 10 in Helios. Over 44 Titan World stores were renovated to a new format to offer a wider choice of premium brands enhancing the overall customer experience.

Eyewear:

The eyewear segment’s revenue growth of 5% y-o-y, led by frames and sunglasses. Product innovation continues to be the core focus area and the centerpiece of Titan Eyeplus offerings. ‘EyeX’ - launched in January 2022 – is a first of its kind smart wearable product that has established the division as a pioneer in smart eyewear within a short span of time. Network expansion continued in line with 51 net store additions during Q4FY2022 coupled with ambitious growth plans for the next year.

Subsidiary performance:

- TEAL: TEAL’s revenue grew by 77% y-o-y in Q4. The automation solutions business saw large dispatches in the quarter triggered due to postponement of deliveries because of supply chain disruptions earlier. Enquiries have shown gradual improvement but are still below normalized levels. The aerospace business achieved moderate growth with a good recovery in orders.  

- CaratLane (72.3% owned): Revenue of the CaratLane business grew by 51% y-o-y led by a strong digital-first strategy. Sales in February 2022 nearly matched the highest monthly sales of November 2021 (of Dhanteras), driven by the highly successful Valentine Day’s campaign of ‘Love it or hate it, #GiftACaratLane’. ‘Harmony’, a new collection inspired by the design of sound waves, was well received by customers.

Key Risks involved:

- The rise in gold prices: Any increase in gold prices would affect the profitability of the jewelry segment and the earnings growth of the company. 

- The slowdown in discretionary consumption: Any slowdown in discretionary consumption would act as a key risk to the demand for the jewelry and watches division. 

- Increased competition in highly penetrated categories: Increased competition in the highly penetrated categories such as watches or jewelry would act as a threat to revenue growth.