Titan Company Stock Analysis – Yadnya Investment Academy

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Short Stock Analysis of Titan

Introduction

The Indian Jewellery Industry went through a lackluster phase post the outbreak of the COVID-19 pandemic. However, things are taking a turn for the better and a full-fledged recovery is underway. With blockbuster demand amid the festive season and the IPO of Kalyan Jewellers coming soon, this sector has gained massive traction. In today’s blog, we present a brief analysis of the Goliath that rules the roost – Titan Company.

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Titan Stock Analysis

Indian Jewellery Market

  • The Indian Jewellery market is estimated at Rs. 4.5 Lakh Crore. Out of which, the organized market accounts for ~ INR 1.4 Lakh Crore (31.1%).
  • Titan is responsible for 4% of the overall jewellery market. It holds a mega 12% market share in the organized segment followed by Malabar Jewellers (10%), GRT (9%) and Kalyan Jewellers (7%).
  • Having said that, one thing that will make your jaws drop is that company enjoys a whopping 56% share in organised market’s profit.
Titan Market Share (%) and EBITDA Margin (%)
  • The fundamental cause for Titan’s dominance over its peers is that they have a robust EBITDA Margin of 12% as against jewellery industry margins at 4%
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Titan- High Expansion Opportunity vs Other Discretionary Brands

  • Titan has an aggressive expansion plan in place. Their target is the household segment consumer acquired by other discretionary brands such as Maruti and Royal Enfield.
  • At present, Titan has 340 Tanishq stores spread across 211 cities. On the other hand, Maruti and Royal Enfield have 2390 and 921 showrooms  widely scattered around 1964 and 680 cities respectively.
  • This simply goes to show the golden growth opportunity staring at Titan. Titan can comfortably open their stores in Tier 2, 3, 4 cities, further developing and diversifying their well-established strong franchise business model.  This trend will be clearly visible in the years to come.
  • Currently, Titan draws only 22%-24% of its revenues from the wedding segment . It is influenced greatly by the unorganized jewellery market.
  • The company’s Digital/Omni-channel Initiatives such as live video shopping, augmented/virtual reality and try at home implemented during the COVID-scenario make it better-placed versus peers to faster and gain market share.

Conclusion

Titan has observed good traction across all its businesses in the recent festive season. The jewellery business witnessed a mid-teens growth (around 15%) for the 30 day festive season starting from Dussehra till Diwali over the last year.

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The management is optimistic and expect the vigorous demand trends to persist in the quarters ahead.



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