Titan is betting big on its wearables business, comprising Titan Smart and Fastrack brands of smartwatches, to deliver a strong top-line growth as the company targets consumer sales of Rs 10,000 crore for its watches and wearables business in two years.
In an interaction with Moneycontrol on March 11 , Suparna Mitra, Chief Executive Officer for Titan Watches and Wearables, said that the company’s wearables are expected to account for approximately 16-17 percent of its revenue in its watches and wearables segment this fiscal year, growing from a revenue share of 10 percent in the last fiscal.
“Wearables is a very big part of our turnover…wearables continue to outpace the analog watch growth even though on a smaller base,” said Mitra.
Titan believes it is on track to hitting the Rs 10,000 crore consumer sales target for the watches and wearables segment in two years, having delivered consumer sales of Rs 5000 crore last year.
Mitra said that the popularity of smartwatches has rapidly surged, particularly during COVID-19. While the interest in smartwatches existed before as well, its adoption soared during the pandemic due to the increased focus on health and wellness.
“For smartwatches, we are right now catering to more than 3 million customers every year and that is growing by about 65-70 percent every year,” Mitra added.
Mitra said Titan has capitalised on premium products, which was already gaining traction around 2017-2018 but saw a notable acceleration post-COVID.
Double-digit growth in international portfolio
In the premium category, Titan and Helios (international brands portfolio) recorded growths that were in line with business growth and were largely driven by the increase in their respective average selling price (ASP). Titan recorded a double-digit growth in its international portfolio, compared to last fiscal.
Titan’s value offerings, such as the new sub-brand, Vyb, introduced within Fastrack and Poze, were launched as part of the Sonata brand. It is more focused on fashion than durability, to capture the younger demographic.
“Younger people or who are looking at the value price points, say between Rs 500 to Rs 2,000, are looking much more towards style and they don't necessarily want it to last for 10-20 years,” Mitra said.
Talking about customers moving towards cheaper options due to significant decline in smartwatch ASPs, Mitra said that the solution lies in differentiation and innovation, particularly in offering products at increasingly competitive prices.
Titan is working on various strategies to differentiate its products in a crowded market by enhancing app usability, improving after-sales services, and delivering high-value propositions to customers, she added.
Talking about outlook, Mitra noted that some brands like Nebula and Raga have done well due to premiumisation. “We are bullish on growth,” she added.
In Q3FY24, the division's total income increased by 21.1 percent year-on-year (YoY) to Rs 982 crore. Revenue from analog watches rose by approximately 18 percent YoY to Rs 810 crore, while revenue from wearables surged by about 65 percent YoY, grossing Rs 136 crore in revenues for the quarter.
Titan reported an EBIT (Earnings before Interest and Taxes) margin of 5.6 percent for its watches and wearables segment in the last quarter. This was the lowest in the past seven quarters.
Speaking about low margins, Mitra said that there was not a big standalone cost that brought the margin downs. A bunch of costs, including higher advertisement costs, due to the festive season was responsible, she said.
She noted that the company is looking at an EBIT margin of around 11 percent for this financial year and would target higher margins in the coming year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
