In this article, we will explore Titan Company Ltd. fundamentally, understand its business model and industry, and determine whether it’s a good investment fit for you.
Titan Company Ltd.
Titan Company Ltd. is one of India’s most well-known companies in the lifestyle sector. It is a market leader in watches, jewellery, and eyewear categories. Over time, it has established credible brands in the space, and is known for its differentiated customer experience.
Recently, on November 21st, the stock hit its highest share price record of ₹3,404 on the Bombay Stock Exchange (BSE), and its market capitalisation crossed the ₹3 lakh crore mark. Experts say that this boom in share price is in part due to an increase in gold imports right before Diwali festivities began in India, and a lower yield on U.S. Treasuries.
After this development, Titan Company Ltd. is officially the 18th most valued company in India, and the second-highest valued company in the Tata Group portfolio.
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Is the jewellery industry a good sector to invest in?
The gems and jewellery business in India is one of the largest in India. It contributes to more than 7% of the total GDP, and well more than 15% of the total merchandise exports of the nation. Including organised and unorganised labour, the industry employs more than 4.5 million workers every year.
As per the latest statistics, Indian jewellery exports constitute more than 3.5% of the world’s total exports, making India among the top 7 highest exporters in the world.
Massive growth in the sector, to the tune of more than 54% over the previous year, brought us to an industry of $39 billion in 2021-22. The Indian government has estimated that by 2027, the Indian jewellery market will reach a valuation of more than $100 billion.
With a revamped gold monetisation strategy put in place, an import duty reduction, hallmarking, and other quality control measures taken by the government, the diamond-cutting, gold, and jewellery industry in India could be a good industry to consider investing in.
Who are TITAN’s competitors in the jewellery sector?
Here are some of TITAN’s competitors:
- Kalyan Jewellers India Ltd.
- Rajesh Exports Ltd.
- Vaibhav Global Ltd.
- Senco Gold Ltd.
- ThangaMayil Jewellery Ltd.
- Goldiam International Ltd.
- Ethos Ltd.
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History of Titan Company Ltd.
The company was founded in 1984 as a joint venture between the TATA Group and Tamil Nadu Industrial Development Corporation (TIDCO). Then, it was named Titan Watches Ltd. It was in 1994 that the company diversified and got into jewellery with Tanishq and the eyewear business with Titan Eyeplus. In 2005, it also launched a youth fashion accessories brand called Fastrack.
By 2022, the company had more than 6% market share in jewellery and had become the fifth-largest watch manufacturer in the world.
Investing in TITAN
Pros
- Largest jewellery retailer in the country with manufacturing facilities in 3 states
- Owns incredibly popular brands like Tanishq, Zoya, Mia & Caratlane
- Has a strong retail presence with more than 580 stores across the country
- TITAN is also the world’s fifth-largest watch manufacturer
- During FY22, the company established a 100% subsidiary in the USA to expand its international business, particularly for Tanishq jewellery.
Cons
- The stock is currently trading at more than 24 times the book value, which signals that it could be grossly overpriced at the current market rate
- There might also be concerns that the company is currently capitalising the interest cost
The finances
| Metric | Value |
| Market cap | ₹3,02,193 cr |
| Book value | ₹50 |
| Dividend Yield | 0.29% |
| ROCE | 25.1% |
| ROE | 30.8% |
| Face value | ₹1.00 |
Shareholding pattern of Titan Ltd.
Here’s the shareholding pattern of VBL:
- Promoters: 52.90%
- Foreign Institutional Investors (FIIs): 19.05%
- Domestic Institutional Investors (DIIs): 9.87%
- Public: 18.00%
It is worth noting here that over the past 5 quarters, domestic institutional investors have been reducing their stake in the company. From September 2022 to today, in November 2023, insurance companies have reduced their stake in the company from 5.5% to 3.5%, while other institutions have remained largely consistent. During the same period, FIIs have increased their stake from 17.04% in September 2022 to a little more than 19%.
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Peer multiple comparison
| Stock | P/E Ratio | P/B Ratio | Div. Yield |
| Titan Company Ltd | 93.69 | 25.58 | 0.29% |
| Kalyan Jewellers India Ltd. | 79..23 | 9.44 | 0.15% |
| Rajesh Exports Ltd | 7.16 | 0.82 | 0.29% |
| Senco Gold Ltd. | 34.45 | 5.77 | 0.15% |
While dividend yield numbers don’t look out of place for Titan, its P/B ratio does seem off compared to its peers. This might indicate overpricing of the stock at current market rates, but warrants further analysis into why the market value of the company is so inflated right now. That analysis might also yield some explanation forto a considerably high P/E number compared to peers too.
Conclusion
So, that’s a brief overview of everything you need to know about Titan Company Ltd. before investingy. This information is by no means, however, exhaustive, and we encourage you to do your own research before investing.
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