Looking for New Highs: Titan Company Ltd Stock Analysis

December 16, 2022

Quick Stock Overview

Ticker: TITAN

Key Data

• Industry: Lifestyle

• Market Capitalization (): 2.21 trillion INR

• Book Value Per Share: 105.06

• Dividend Yield: 0.30

• Sales (): 9,163

• Net Profit: 2,198

• P/E: – 70.50

Business Model

The Tata group's Titan is the most significant lifestyle retailer. Tata Group owns 53% of the company, while DIIs and FIIs each have a 19% and 17% share.

The current five main categories in which Titan operates are watches, jewelry, eye care, Indian dress wear, and fragrances.

Titan has introduced popular lifestyle brands, including Tanishq, Titan Eyecare, Sonata, Fast track, Skinn, and Caratlane. The jewelry business generates 87% of its overall revenue and runs 645 retail locations for various brands.

There are jewelers operating in 242 municipalities around the nation.

Titan's second-largest segment, including 10% of overall revenue, is watches and wearables, which are sold are sold through a network of 905 company-owned retail stores and 8000+ multi-brand retailers.

TITAN around World

INDUSTRY TREND

• The demand for goods may rise as a result of rising disposable incomes and a prospective GST rate reduction on specific consumer durables; demand for electronic goods, such as TVs and other electronic devices, has resumed following COVID.

• Since production facilities have recently moved to India and consumer electronics firms are successfully competing in the market for smartwatches alongside Chinese and other rivals, there are a lot of fresh options accessible.

• The manufacturing of electronic hardware is now open to 100 percent foreign direct investment (FDI), and the production-related incentive programs are projected to spur output worth billions of dollars.

• Electronic goods have drawn 3.58 billion USD in FDI inflows during the past 20 years. By 2024–2025, it is anticipated that India's electronics manufacturing market will be worth $300 billion.

FINANCIALS

RATIO ANALYSIS

Operating Profit Margin - 11.02

Operating Profit margins have bounced back to pre covid levels and are expected to stay between 13-15%

Debt to Equity (x) - 0.06

The debt to Equity ratio dropped from 0.58 in 2021 to 0.06 in 2022. It has reduced its long-term borrowings this year.

Current Ratio (X) - 1.66

Improve in current ratio due to an increase in current assets.

RECENT TRENDS

• Taneira established "Tarang," a line of tussar sarees and ready-to-wear items with the intention of building a recognizable brand in the unorganized ethnic market.

• The majority of the company's companies experienced double-digit growth, and overall sales increased 18% YoY in the most recent quarter. Around 105 stores (net) were added to the retail network during the quarter.

• A brand named ‘IRTH’ was launched in October 2022 for women’s bags.

FUTURE OUTLOOK

• The entry of global companies into India has increased competition, yet the demand for consumer durables has been steadily rising thanks to rising disposable income and technological advancements.

• The Indian markets for refrigerators, washing machines, and air conditioners were predicted to be worth roughly US$ 16 billion in 2021.

• It is anticipated that the market size for each of them would expand significantly.

• Bright policies and efforts like Make in India and businesses moving their manufacturing bases to India demonstrate a positive outlook for the industry and the nation.

• The demand for lifestyle goods will skyrocket as Indians move closer to having a greater GDP per capita.

• The company's ability to reach Tier 3, 4, and 5 towns with its brand name will help it grow its entire business. New brands in ethnic wear, fragrances, and women's bags will also help.

• By the end of FY23, the company is anticipated to overtake its competitors in the wearable market thanks to advancements in technology and an excellent management team and board of directors.