Titan relies on digital gold biz for top-line growth

- The segment has seen increased popularity in last one year

- Titan is the first large jeweller to offer digital gold

- Lack of regulations in the segment poses biggest threat

- However, Sebi has restricted brokerage firms to sell digital gold

It aims at young customers who are keen to buy gold as part of their investment portfolio that will help it build a sizeable asset class for redemption in the future

Bengaluru: Watch-to-jewellery maker Titan's entry into digital gold segment that allows consumers to buy gold in digital form starting from Rs100, is likely to give a strong revenue stream to the company in the near future.

Experts said that despite competition in the segment with many digital wallet firms like Paytm, Amazon Pay and investment platforms like Kuvera and Groww offering this product, Titan is the first big jeweller to enter this space. Also, MMTC-PAMP India Pvt Ltd, a joint venture between state-run MMTC Ltd and Swiss firm MKS PAMP, and DGIPL also sell digital gold products on their platforms.

"We see this as a positive step to target new and young consumers for Titan who are not looking at buying jewellery in near term, but are likely to buy digital products and could be a captive audience for jewellery in medium to long-term," said Abneesh Roy, executive director at Edelweiss Securities.

"There are many non-jewellery players who offer digital gold, but Titan is the first large jeweller to offer it. Hence, in our view, it will take time for it to have material impact on Titan's business, but is a brilliant strategic decision to add new consumers and stay relevant," he added. In late April, Titan has launched this segment which allows consumers to start buying digital gold for as low as Rs100 making it very affordable for young buyers.

Titan plans to aim at young customers who are keen to buy gold as part of their investment portfolio that will help it build a sizeable asset class for redemption in the future. For this, the company has tied up with Digital Gold India Pvt Ltd to allow consumers to exchange, buy or sell physical gold through the latter's SafeGold platform.

Since the product launch, the Tata Group company is witnessing around 70 per cent of the users registering for this product being the first-time shoppers of the brand. However, experts also opined that there are risks to the current business plan given that the segment remains unregulated. Earlier, market regulator Securities & Exchange Board of India (SEBI) has restricted brokerages from selling digital gold. This move has hit players like Groww, Upstox, Motilal Oswal among others.

Digital gold saw a surge in demand during the nationwide lockdown last year. As digital gold can be bought in small quantities and the buyer doesn't have to buy it in physical form, this makes the segment attractive to investors. However, lack of regulation poses the biggest risk to the digital gold segment as of now. Currently, the segment doesn't come under any sectoral regulator in India.