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Brokerage Antique Stock Broking initiated coverage on Titan Company with a target price of Rs 2,228, citing sustainability in premium valuations given its superior earnings growth. Shares of the company have jumped nearly 66% to Rs 1,966 in the past one year till September 2, 2021. On the other hand, the benchmark BSE Sensex has advanced 48% during the same period. With a worth of more than Rs 8,500 crore, the Big Bull held 4.26 crore shares of the gems-to-jeweller major as of June 30.

Antique Stock Broking expects jewellery segment to post revenue and EBIT CAGR of 15% over FY20-24 on the back of strong market share gains, aggressive store expansion and innovative design. Organised jewellery retail share has witnessed a major shift from 6% in FY07 to 32% in FY21.

“Titan looks well-placed to capture value from the long-term growth potential in the jewellery sector by gaining market share consistently. We understand that the market share gains have been the key growth driver for Tanishq as industry growth has been weak in the last five years. Market share gains are clearly evident from revenue CAGR of 18% in the jewellery segment over FY16-20. Given Tanishq’s market share of around mid-single digit and the continuing struggles of unorganised and other organised peers owing to the Covid-19 crisis, Titan has a strong growth runway going ahead,” the brokerage said in a report.

Jewellery industry has been going through regulatory changes since 2013 which has been favourable for organised players like Titan. Events like the ban on “gold on lease”, imposition of the 80:20 import rule, cash limit of Rs 2 lakh, demonetisation and GST, have accelerated market share gains for organised players.

“We note that such events are further influencing consumers to shift to organised retail. Notably players in the unorganised segment have started to witness a credit squeeze in the market which is restricting their operations and aiding the growth of organised retail,” Antique Stock Broking said.