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Titan Company - Competition Chipping Away Tanishq’s Gold Rate Premium: ICICI Securities

Pressure on gross margin to sustain; operating leverage advantage aids Tanishq’s ability to compete.

<div class="paragraphs"><p>A Tanishq store exterior. (Source: BQ Prime)</p></div>
A Tanishq store exterior. (Source: BQ Prime)

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ICICI Securities Report

The rise in (relative) competitive intensity in jewellery retailing led to melting-away of gold-rate premium charged by category leaders (versus historically) compared to competition.

We observe that in key cities (top nine cities which contribute ~30-35% of Tanishq’s total retail area)-

  1. premium charged by Tanishq has declined by ~50% (to 1-3%) from historical levels;

  2. Tanishq is aggressively competing with retailers like Kalyan Jewellers India Ltd., Senco, GRT, Malabar; in 50% of its key markets (the top nine cities), gold rate charged by Tanishq has been 0.2-0.8% lower than Senco;

  3. key national competitors (Kalyan Jewellers, Malabar) have moved to one-nation one-gold price;

  4. gold price charged (under one-nation one-gold) is similar across companies, as per market rate set in Kerala (generally lowest compared to other markets; 1- 1.5% premium versus bank rate);

  5. amongst all key markets, gold-price premium (charged by Tanishq) in Kolkata is the highest (6% higher than Kalyan Jewellers, Malabar).

Click on the attachment to read the full report:

ICICI Securities Titan_Gold_Premium Update.pdf
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