Watches and accessories company Titan Co Ltd has benefited from the recent churn in the jewellery industry. Acording to the reports, the company has seen an uptick in the number of new customers, especially high-net worth individuals (HNIs), besides an increase in the average bill size of first-time buyers.
Why is this important
Ever since the Nirav Modi-Mehul Choksi scandal tainted the jewellery sector in India, the entire spectrum, from small and medium jewellers to listed chains, has been severely impacted. Soon after, stock prices of jewellery firms were severely hit, while banks started avoiding jewellers. Consumer sentiment and behaviour, too, changed. The sector was already reeling under the impact of demonetisation, GST and Prevention of Money Laundering Act. It is also alleged that Gitanjali also sold substandard and fake diamonds to its customers. This has impacted the sentiment of buyers negatively.
Impact on stock
Titan is seen as a trustworthy corporate. Hence, with the demand of jewellary going up and trust factor playing a major role in affecting consumer sentiment, Titan is likely to benefit in terms of gaining market share.
Titan (CMP Rs 908, M Cap – Rs. 80,610 PE 45x FY20E)