Titan Company Ltd is a prominent and trusted brand that encompasses several well-known brands such as Tanishq, Titan, Fastrack, and CaratLane. Established as a joint venture between the Tata group and Tamilnadu Industrial Development Corporation (TIDCO) in 1984, Titan started its journey as a manufacturer of quartz analogue electronic watches. Over the years, it has expanded its business to include various segments such as watches, jewellery, eyewear, perfume, and clothing.
History of Titan Company Ltd
In its early years, Titan focused on manufacturing watches and gradually ventured into other sectors, including watch accessories and jewellery. With its commitment to excellence and innovation, the company has transformed itself into a premier lifestyle brand. Today, Titan is recognized as the world’s fifth-largest wristwatch manufacturer, with a presence in over 241 cities in India. It operates through more than 7,000 multi-brand watch outlet stores and boasts 2.5 million square feet of retail space.
Brands of Titan at a Glance
To understand the magnitude of Titan Company Ltd, let’s take a closer look at the various brands operating under its umbrella:
Watches
Titan is one of India’s leading watch brands, catering to different market segments. It holds over 60% share in the organized domestic watch market. The company offers a wide range of brands, including Titan, Fastrack, Zoop, and Sonata. It also has a luxury brand called Favre Leuba, which caters to the premium market segment. With its presence across 120 cities and more than 440 exclusive showrooms, Titan has established itself as a leader in the watch industry.
Jewellery
Titan’s jewellery division comprises four main brands: Zoya, Tanishq, CaratLane, and Mia. Tanishq is the most famous brand, with a wide network of over 350 stores spread across 200 cities. Zoya, on the other hand, is a luxury brand that offers premium craftsmanship, inspired design, and premium natural stones. CaratLane, which is an omnichannel brand, is currently the largest online jeweler in India. Lastly, Mia offers contemporary workwear jewellery.
Eyewear
Titan’s eyewear division includes brands such as Titan Eye Plus, Glares, and Fastrack. These brands cater to the mid-market and mass-market customers. With over 700 exclusive stores, Titan has made significant strides in the eyewear industry.
Perfume
In the perfume category, Titan has two flagship brands: Skinn and Fastrack. Skinn caters to the mid-market segment, while Fastrack targets the mass-market segment. However, due to the pandemic, this segment has faced challenges, as lockdowns and movement restrictions have reduced the use of perfumes.
Sarees
Titan has also ventured into the clothing business with its saree brand called Taneira. With 14 stores spread across six cities, Taneira aims to build its presence across India.
Financial Snapshot of Titan Company
When considering the size of a company, it’s essential to analyze its financial performance. Let’s delve into Titan’s revenue and net profit figures:
Revenue
Titan Company Ltd has a diversified source of revenue. Its jewellery division contributes approximately 83% of the total revenue, followed by the watch segment with 13%, and eyewear with 3%. Over the past three years, the company has shown an upward trend in revenue.
Net Profit
The net profit of Titan Company Ltd increased from FY19 to FY20 but declined in FY21. This can be attributed to the business slowdown caused by the COVID-19 pandemic and the temporary closure of stores.
Table: Financial Snapshot of Titan Company
| Year | Revenue (Rs in Cr) | Net Profit (Rs in Cr) |
|---|---|---|
| 2019 | 19,778.52 | 1,404.15 |
| 2020 | 21,052.00 | 1,501.00 |
| 2021 | 21,644.00 | 973.00 |
Financial Ratios of Titan Company
Financial ratios provide valuable insights into a company’s performance. Let’s examine some key ratios for Titan Company Ltd:
Net Profit Margin
The net profit margin indicates how well a company is performing and how much profit it can generate from its sales. Before the pandemic, Titan maintained a stable net profit margin.
Return on Equity (ROE)
ROE measures a company’s efficiency in generating profits. It is an essential ratio for investors. Titan’s ROE has shown a declining trend in the last three years due to lower income.
Return on Capital Employed (ROCE)
ROCE indicates how effectively a company can generate profits using its capital employed. Titan witnessed an uptrend in the ratio from FY19 to FY20, but it declined in FY21 as the EBIT for the company decreased.
Table: Financial Ratios of Titan Company
| Year | Net Profit Margin | Return on Equity (ROE) | Return on Capital Employed (ROCE) |
|---|---|---|---|
| 2019 | 7.03% | 24.94% | 26.41% |
| 2020 | 7.11% | 22.12% | 35.22% |
| 2021 | 4.52% | 12.47% | 18.50% |
Valuation Ratios of Titan Company Ltd
Valuation ratios provide insights into how the market values a company’s stock. Let’s examine some key valuation ratios for Titan Company Ltd:
Price-to-Earnings (P/E) Ratio
The P/E ratio compares a company’s current stock price to its earnings per share. Titan Company Ltd has a lower P/E ratio (142.45) compared to the industry average (169.59), indicating a relatively lower valuation.
Price-to-Book (P/B) Ratio
The P/B ratio compares a company’s market valuation to its book value per share. A lower P/B ratio is generally considered ideal.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio calculates a company’s total value or assessed worth and is used for comparison among companies in the same industry. Titan Company Ltd has had a higher EV/EBITDA ratio in the last three years.
Table: Valuation Ratios of Titan Company
| Year | P/E Ratio | P/B Ratio | EV/EBITDA Ratio |
|---|---|---|---|
| 2019 | 71.92 | 16.65 | 47.05 |
| 2020 | 55.35 | 12.47 | 32.45 |
| 2021 | 142.45 | 18.50 | 74.57 |
Stock Performance of Titan Company Ltd
Titan Company Ltd’s stock has experienced significant growth since its listing on the stock exchange in September 2004. Over the past five years, the stock price has surged by approximately 410%, increasing from Rs 491 per share to over Rs 2500 per share.
However, the stock has been volatile this year, influenced by market conditions and the Russia-Ukraine conflict. The shares reached a high of Rs 2712 in March and a low of Rs 2310 in January. The company currently has a market capitalization of Rs 2,21,196.63 crores.
Shareholding Pattern of Titan Company Ltd
The shareholding pattern of Titan Company Ltd provides insights into the ownership structure of the company. Here are the major shareholders:
Promoters
Tamilnadu Industrial Development Corporation Ltd holds the largest stake in the company as a promoter, with a total holding of 27.88%. Tata Sons Private Limited holds approximately 20.84%.
Ace Investors
Renowned investor Rakesh Jhunjhunwala, often referred to as the “big bull” of the Indian stock market, holds around a 3.98% stake in Titan Company Ltd. His wife, Rekha Jhunjhunwala, also owns approximately 1.07% of the company. Other institutional investors, including Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), hold 18.4% and 10.21% respectively.
Future Prospects of Titan Company Ltd
Despite the challenges faced during the COVID-19 pandemic, Titan Company Ltd is focused on cost-cutting measures and efficient expense management. The company aims to leverage cutting-edge technology to deliver more innovative products to its customers. It has implemented augmented reality features on its Tanishq and Titan EyePlus websites, allowing customers to virtually try on products before making a purchase.
To boost sales, Titan has formed alliances with major e-commerce platforms such as Amazon, Myntra, and Flipkart. Additionally, the company is adopting sustainable business practices to comply with ESG norms.
In Closing
Titan Company Ltd is an industry leader in the watch and jewellery sectors in India. From its humble beginnings as a watch manufacturer, it has grown into a premier lifestyle brand. With its strong presence in various segments and a focus on innovation, Titan continues to shape India’s retail market.