Titan Industries: The glitter is intact

Over the last 2 years there has been a clear shift towards branded jewellery, watches

As the branded jewellery market is expanding in India, Titan Industries is set to glitter. Over the period of last two years there has been a clear shift towards branded jewellery and watches which should benefit Titan.

A recent survey by Credit Suisse says the branded jewellery market is high growth market as over 90 % of the market is unorganized which is likely to gradually lose share to the organized retailers like Titan.
Higher disposable income coupled with higher aspirations are fueling the growth of branded jewellery branded market.

Titan’s management has created a strong aspirational brand in this market (Tanishq) with a strong competitive advantage of having the trust associated with the Tata brand. As the company is investing in retail space expansion, the company is expected to garner more market share, the survey said.

With Tian in the process of doubling its retail space over FY 11-13, a strong volume growth of 15 %  to 20 percent  is expected with a lag of 12-18 months. Historically as well, there has been a strong co relation between space addition and market share gains by Titan.

According to the report, Titan’s ROCE moved up from 26 % in FY 09 to 50 % in FY 12, while ROIC moved up from 28 % to 114 % in the same period. Titan has evolved itself into a high quality business model especially in jewellery with return ratios comparable to FMCG companies.

During the last quarter, company's jewellery business witnessed a growth of 25.15 % to Rs 1,985.87 crore, while earnings in the watch segment increased by 17.23 % to Rs 383.11 crore.

Market trends have indicated that despite the rise in gold prices, demand for jewellery remains intact.