Can Titan’s ₹1 lakh crore dream sparkle amid challenges?

Branded jewellery was a novelty in 1994, when Titan launched the Tanishq jewellery range, nearly a decade after captivating India’s market with quartz analogue wristwatches and unwinding the monopoly of ‘Timekeeper to the Nation’ HMT. Today, 30 years later, Titan’s branded jewellery division fetches nearly 90% of its revenue.

Titan’s gold and jewellery division is growing at a pace that most of its peers in the consumer discretionary market would love to replicate. Although the Covid-19 pandemic’s lockdowns and supply disruptions in 2020 hit demand for consumer discretionary items, Titan reported high double-digit growth in its topline. Between FY21 and FY24, Titan’s revenue grew at a compound annual growth rate of 33.14%, from Rs 21,644 crore to Rs 51,084 crore. In the same period, its profit after tax grew at a CAGR of 53.11%, from Rs 974 crore to Rs 3,496 crore.

At the heart of this growth story was gold, or its jewellery division, to be precise. Net jewellery sales—revenue collected at the counters minus GST, other taxes and dealer commissions—grew at a 26% CAGR between FY20 and FY24, from Rs 16,738 crore to Rs 42,172 crore. (Titan has not given up on watches, which have been looking up since the Covid-19 lockdown. More on it later.)

Titan’s growth story has made it the crown jewel in the diversified Tata Group, but it is not sitting pretty. The key business divisions have been given ambitious targets. One is to double the overall retail value of its products or uniform consumer price (UCP) to Rs 1 lakh crore by FY27.

Titan reckons it can do this by doubling the UCP of its jewellery division (which was Rs 45,000 crore in FY24), increasing the UCP of its watches & wearables division by Rs 4,000 crore (Rs 6,000 crore last year), that of Taneira branded sarees to Rs 1,000 crore (Rs 250 crore) and Titan Eye+ (eyecare) to Rs 2,000 crore (Rs 1,000 crore in 2024).

Alpana Parida, a brand consultant and Founder of Tiivra Ventures, says trust in the Tata name has driven Titan’s success in jewellery. Trust and timing. “Titan ventured into the jewellery market at the right time, when our economy was growing, and many were opening up to the idea of investing in jewellery through a trusted corporate jeweller,” says Parida, who was head of marketing at Tanishq from 2007 to 2009. Parida says Titan played a crucial role in India’s branded jewellery market by creating trust and helping it grow. The trust in the brand Tata, its jewellery designs, and the store experience stood out for the brand.

Gold as a Consumer Good!

That, however, is half the story. Titan’s growth in its jewellery business has made it a leading consumer goods company. Though not a like for like comparison, against FMCG market leader Hindustan Unilever’s operating revenue of Rs 62,700 crore in FY24, Titan reported Rs 51,084 crore. Part of Titan’s sales can be attributed to the surging prices of gold and other precious metals in the past five years. In FY19, the median price of 24-carat gold in India was Rs 32,000 for 10 grams; in FY24, it rose to Rs 74,000. Silver prices were up by over 70% during the same five-year period.

But Ajoy Chawla, Chief Executive Officer of Titan’s jewellery division, says the growth was not all due to the surge in gold prices. “Rising gold prices have aided growth, but that is partly true. The other part of the story is that consumers are not price-insensitive. So, if the gold price goes up by, say, 10%, the increase in average purchase size may go up by 5-7%,” says Chawla.

(It’s no secret that Indian households together hold nearly 24,000 tonnes of gold, which is more than the total held by the world’s top six central banks, per the World Gold Council.)

While the price of gold increased by over 16% last year, the average ticket size (total sales divided by the number of bills) grew by 8%. But Titan’s jewellery sales grew 20% as new buyers flocked to it. Also, when the price of gold jumps, customers prefer to wait and watch. Consumers began thinking, can we afford gold jewellery any more?

‘ORE’ for Less

This posed a new challenge, but Chawla was ready. First, Titan pushed an existing range of gold jewellery that looked bulky but weighed less and, therefore, cost less. Second, Titan promoted the exchange offer. Bring your old gold jewellery, Titan told buyers, and get the gold valued at the same rate at which Titan is selling the gold in its new jewellery in exchange.

“While we always had the exchange programme, we are now constantly educating the buyer about its transparency. Gold exchange reduces the [cost] burden on customers. Also, we have recently introduced a lot of lightweight jewellery,” he says.

Third, a price lock-in or lowest price scheme allows customers to choose between locking the gold price at a certain date, purchasing within a time frame at the same rate, or choosing the lowest rates during the period. It ran the scheme in the June quarter and attracted 70,000-80,000 customers.

With over Rs 45,000 crore in retail revenue, Titan is India’s largest branded jewellery company. While the flagship Tanishq drives the jewellery division, it is flanked by brands Mia and Zoya, aimed at young working women, and CaratLane, a jewellery start-up in which it acquired a majority stake in 2016.

Great Challenges

Investors and entrepreneurs are eyeing India’s burgeoning branded jewellery market. The market, primarily driven by gold, is estimated to be valued at Rs 6.7 lakh crore and has a CAGR of 6%. But a significant part of it is unorganised (read: unbranded). Brands such as Titan, Kalyan Jewellers, and Malabar Gold & Diamond are expanding their networks, and regional players are going national.

According to Mangesh Chauhan, MD & CEO of Sky Gold, a Mumbai-based jewellery manufacturer with clients ranging from Malabar to Kalyan Jewellers, brands such as Titan have grown their presence in India’s jewellery market over the last two decades, from 10% in the early 2000s to 35%. He says brands are expanding the market size and taking market share from the unorganised segment. The branded jewellery market has grown at 15% for the last three years, compared with the overall market growth of 6-7%.

Diversified conglomerates are also muscling in. Aditya Birla Group, one such group that owns an array of businesses from carbon black, cement and chemicals to consumer retail, telecom and textiles, stepped into the branded jewellery space in July. Chairman Kumar Mangalam Birla, launching its brand Indriya at an extravagant event in New Delhi, explained why. Birla said the Indian gems and jewellery industry represents a true economic behemoth and is poised to grow to Rs 13 lakh crore by 2030. However, despite the emergence of big brands, more than 60% of the industry is unorganised.

“There are only a handful of national players, and the largest national brand commands only 6-7% of nationwide market share,” Birla said. The jewellery industry contributes 7-8% to India’s GDP, creating jobs while developing skills and boosting exports.

“The future looks attractive,” Birla said, “and India’s jewellery market is poised for tremendous growth, driven by the fact that wedding jewellery constitutes 55% of the overall market.” The wedding market is estimated to be worth $130 billion, of which jewellery is a big chunk. With over half the population under 25, the “potential for growth is tremendous,” he said. Birla will invest Rs 5,000 crore to go national. “This is an unmatched equity infusion... We will be among the Top 3 national jewellery retailers over the next five years and will continue to grow at a 50% CAGR,” he said.

Birla said the group’s expertise in consumer retail business will drive the initiative. Aditya Birla Group owns one of the largest retail chains with various fashion and apparel brands, such as Pantaloons, Van Heusen, Allen Solly, and Peter England.

Naveen Trivedi, Senior Vice President at Motilal Oswal, says, “The market is in the consolidation phase, and there will be steep competition among large players with some changing ranks.”

The Little Towns Titan Likes

With more than 900 stores across 265 towns, Titan already has the largest retail footprint and is now expanding to newer locations, most of which are in Tier II, III & IV towns. According to Chawla, customers in smaller towns are ready for branded jewellery; they need the physical presence of a brand such as Titan. In FY24, nearly 30% of its jewellery sales came from such towns. Titan aims to have 1,250 stores offering its four key brands by FY27.

Trivedi of Motilal Oswal says its jewellery business occupies 45% of the country’s branded jewellery outlets. “Not many can achieve the level of efficiency in expanding stores that Titan has managed,” he says.

JLL India, a consultancy specialising in commercial real estate, says competition among leading brands has been good for the sector. In the first half of 2024, jewellery brands took on lease close to 105,000 sq. ft of retail space in India’s top seven cities. “Tanishq is one of the greatest success stories of Indian retail…It is the leader of the pack in its segment and is known to enter newer micro markets within major metro cities and even newer Tier II and Tier III cities,” says Rahul Arora, Head of Office Leasing & Retail Services, JLL India, and Senior Managing Director for Karnataka, Kerala.

Titan’s jewellery business has left other divisions such as Taneira, Skinn (perfumes) and Eye+ trailing behind. Between FY20 and FY24, the share of the jewellery division in Titan’s top line has surged from 81.6% to 89.4%.

Trivedi says three factors have helped Titan: rising gold prices, steady retail expansion and market formalisation and consolidation.

The share of watches and wearables, its second largest division, fell to 8.3% in FY24, from 12.4% four years ago. Titan Eye+ has decreased to 1.5% from 2.6%. The other divisions, including handbag brand Irth, now contribute less than 1% from 3.4% in FY20.

According to Parida, the lack of growth of its other ventures is also part of the Titan story. “It has been disappointing that nothing that Titan has done, apart from jewellery, has done well. Titan entered the eyecare business way before Lenskart. It was Titan’s first right to win. Then, there is Taneira, which is also not making much money,” she says.

C. K. Venkataraman, Titan’s Managing Director, says Taneira is ready for showtime. “Twenty years ago, in 2004, Tanishq was also a small brand. In five years, Taneira will become a major brand. We have already set a target of Rs 1,000 crore in the next two years,” he says.

Kunal Vora, head of India equity research at BNP Paribas, says jewellery will always have an edge. “It’s not that the other business segments like Taneira or watches & wearables haven’t grown. But due to the nature of their business, jewellery will always hold the largest share,” says Vora.

India’s New Timekeeper?

Titan is one of the largest players in the local wristwatch market, with some 1,135 stores. Sales of the watches and wearables division increased to nearly Rs 4,000 crore in FY24 from zero in mid-2020 and Rs 2,600 crore in FY20.

Suparna Mitra, the division’s chief executive, says business has steadily grown after the economy put behind the Covid-19 lockdowns. Sales grew at 31% CAGR between FY22 and FY24, against 3% between FY15 and FY20.

First, Titan entered the fast-growing smartwatch market, in which demand hit 40 million units in 2024. Premium players such as Apple boosted aspiration levels, and mass-market brands such as Boult, Noise, and boAt fed demand. Titan entered the market in 2021 and, by March 2024, had 6.7% of the volume, per IDC.

In the March quarter, while the Top 3 players registered negative growth, Titan grew 92% year-on-year, led by Fastrack, a young, mass-market, mid-segment brand. In FY24, Titan added 44 Fastrack stores and renovated 33.

Second, Titan premiumised its portfolio as consumers avoided mass-market discretionary products, pushing three brands—Nebula, Edge and Xylem. Nebula watches, made of precious metals, are for affluent women in the aspirational luxury segment. Edge is a unisex brand, while Xylus is positioned as a Swiss-made watch.

Challenges in the Mass Market

Titan’s mass-market Sonata and Fastrack slowed down in 2024. Titan’s annual report states, “Affordable analogue watch brands like Sonata and Fastrack saw major headwinds as consumers held on to purchasing.”

However, Titan’s costlier watches gained traction, and in the April-June FY25 quarter, it reported 15% year-over-year growth. “Due to the sheer scale of the jewellery business, it is natural that its share has increased. But what is more important for us is gaining consumer market share in each category we are present….We need to be the leader in the markets,” says Venkataraman.

Gold’s steady rise hurt Titan’s growth in Q1FY25. Sales of its jewellery division were up just 9%, as gold prices went up by double digits and illegal imports increased.

Respite, however, came from an unlikely quarter. When Finance Minister Nirmala Sitharaman announced in her July 23 Budget speech a cut in the effective import duty rate on gold from 18.5% to 9.2%, gold became cheaper, making life easier for everybody.

Chauhan of Sky Gold said this has brought back consumers. “The duty cut will reduce illegal imports, boosting the fortunes of large branded players who use only legal gold,” he said.

Venkataraman is betting on women to power the Titan range, not just jewellery.“The aim is to position the brands as such that a lady starts the day with a Skinn perfume and ends it with a Tanishq necklace,” he says.

@arndutt