Titan’s recent announcement of acquiring a 27.2% stake in CaratLane (CL) from Mithun Sacheti and family for Rs 46.2 billion marks a significant development. This transaction values CaratLane at Rs 170 billion, although our valuation pegs it slightly higher at Rs 208.5 billion. After this, Titan’s stake in CaratLane will rise from 71.09% to 98.28%. Titan intends to also purchase the remaining 1.72% through CL employee ESOPs at a similar valuation, totaling around Rs 49.15 billion.
The departure of CaratLane’s founder accompanies this deal, as Titan’s management takes the reins of the CL business. Leveraging Titan’s successful experience in scaling up Tanishq, this acquisition bodes well for CaratLane’s future prospects. An encouraging outcome of this move is the potential for a more streamlined integration of CaratLane and Tanishq’s Go-To-Market (GTM) strategies, operations, and sourcing.
CaratLane (CL) has emerged as India’s top digital-first omni-channel jewelry brand, achieving a 51% revenue CAGR, reaching Rs 21.6 billion, and enhancing Ebit margin by 10.6 ppts to 7.6%. This success stems from strong designs, tech/data capabilities, consumer trust, omni-channel strategy, and a solid team and culture. CL has optimised store expansion, preparing for its next growth phase. Targeting Rs 100 billion in sales and 500+ stores by FY2027, CL’s management aims for a smooth transition post-founder exit. Titan’s success with Tanishq suggests a positive transition for CL.
Opportunities are: (i) potential Mia and CL consolidation due to overlap, (ii) CL’s introduction in Tanishq stores, and (iii) overseas expansion.
Titan’s long-term appeal derives from several factors: (i) Its market share (7%) within a vast addressable market, (ii) a notable gap compared to competitors, and (iii) consistent investments and advancements on various fronts, including customer base enlargement, regional market penetration (notably in TN), success in the wedding segment, global expansion, high-value segment focus, and omni-channel strategies. These efforts position Titan to capture a larger market share in thecoming years.