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Organized jewellery players, Titan in particular, have gained market share from unorganized jewellers over the past few years - aggressive store expansion, a growing share of studded jewellery, hallmarking initiation and digitization were the key catalysts. ICICI Securities, a top brokerage firm suggests investors to add the stock of Titan.
Stock To Add: Target Price
The Current Market Price (CMP) of Titan is around Rs. 2641. ICICI Securities has estimated a Target Price for the stock at Rs. 2900. It is a large-cap stock with a market capitalization of around Rs. 236,652 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 2641 |
| Target Price | Rs. 2900 |
| Potential Upside | 9.80% |
| 52-week high share price | Rs. 2,768.00 |
| 52-week low share price | Rs. 1,825.05 |
Tanishq store penetration increased
Tanishq store penetration has increased in semi-urban / rural, the brokerage firm says. Our analysis of Tanishq's store network change over the past 12 years indicates that the share of stores in semi-urban / rural has increased to 54% now from 50% in 2020 and 27% in 2011. It currently has 127 stores in 126 rural areas as compared to 32 stores in 31 rural areas in 2011. We believe this increased penetration into smaller towns is likely to help in faster growth for Titan. We also believe Tanishq's new growth engine should help accelerate the adoption in rural areas.
Long-term transition
We expect Tanishq to benefit from long-term transition to organised, strong demand from wedding jewellery and high-value studded jewellery, consumers tend to see gold as an investment and indulgence, hallmarking to benefit formalisation with increased consumer awareness on ethical standards, and consumer desire on better shopping experience (transparent pricing, buyback). We believe the concerns on margins are likely to be less warranted given its consumer recruitment and store expansion in FY23, the brokerage firm said.
Stock Upside
Giving an add rating, ICICI Securities said, "We broadly maintain our earnings estimate for FY23E-FY24E. We model revenue / EBITDA / PAT CAGRs of 21 /28 /30 % for FY22-FY24E, respectively. Maintain ADD with a revised target price of Rs. 2,900. Key downside risks are irrational competitive environment and potential shift to fixed making charges that could limit long-term benefits from operating leverage."
Disclaimer
The above stock was picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
