NEW DELHI: Ace investor Rakesh Jhunjhunwala and his better-half Rekha Jhunjhunwala first bought this stock in 2005.

Over the next two-three years, the couple steadily raised stake in the company to over 9 per cent and made sure their combined stake never fall below 8-10 per cent.

That’s the story for more than a decade now. And Titan has reciprocated this loyalty and rewarded them handsomely.

In the last 10 years, the company has grown its sales and earnings at over 20 per cent compounded annually. Ever since Jhunjhunwalas' first invested in this stock (based on data available with stock exchanges i.e.

March 2005), the company’s market value has swelled 87 times (nearly 29 per cent CAGR), as the stock soared 8,624 per cent.

Dividend payout ratio has been at 27 per cent. From a market-cap of mere Rs 1,000 crore, the company has since entered the elite Nifty50 club. This past week, the Tata Group firms said it was targeting Rs 50,000 crore in total sales by March 2023, the jewellery business alone accounting for 80 per cent of it.

This should translate into a roughly 20 per cent earnings growth over next five years. Of the 31 brokerages that cover the stock, 23 have a ‘buy’ or higher rating on it, six others rate it ‘hold’ and two have a ‘sell’ or lower rating, Reuters reported. Titan’s stock has delivered immense value to investors over the last several years, and its ability to compound earnings at 23 per cent annually over last 10 years has been a key enabler in this regard, brokerage JM Financial said in a note. The brokerage expects stock’s premium valuation to sustain. “We believe 20 per cent revenue CAGR over FY18-23E should support margin expansion, which should ideally lead to an even higher rate of profit growth during this period,” it said. PossibleThe company currently enjoys only 5 per cent share of the Rs 2,00,000 crore jewellery market, which it aims to raise to 10 per cent by FY23. If it were to hold true, India’s jewellery market needs to swell to $61-62 billion by FY23 from $37 billion at present, growing at 8-9 per cent annually over next five years.

Titan expects at least 2.5 times growth in the jewellery segment and aims to more than double its eyewear business in next five years.

JM Financial says while the total gold demand in the country grew at 11 per cent CAGR over last 10 years in value terms, the industry actually shrank in size in last five years in value terms. Besides, the brokerage noted that Titan would need to grow its non-jewellery segment by 16-17 per cent per annum on an average over FY18-23 against 5 per cent growth at present. Consistent showData compiled from Capitaline suggests the company’s net sales rose from Rs 2,090.65 crore in FY07 to Rs 12,903 crore in FY17; that’s 20 per cent CAGR.

Profit grew 22 per cent annually to Rs 697.28 crore from Rs 99.86 crore.

For the first nine months of FY18, the company reported Rs 797.51 crore profit over Rs 11,631.23 crore sales. Shift to organised sectorThe Tata firm is projected to be a major beneficiary from the shift from unorganised to organised sector.

Recent changes in regulations such as requirement of identity proof for all transactions worth above Rs 2 lakh, GST implementation and a crackdown on black money have tilted the trade decisively in favour of organised players, among which Titan is a dominant one in terms of scale and trust, Motilal Oswal Securities said in a note. Titan’s recent aggression to capitalise on the massive opportunity is heartening.

Earnings CAGR is likely to be a strong 26 per cent over FY18-20.

The sheer scale of top-line opportunity demands premium valuations, the brokerage said.

It has a ‘buy’ rating on the stock, with a revised target price of Rs 1,090. Recent loan scams involving some of big jewellers, such as Nirav Modi and Mehul Choksi-led Gitanjali Gems, too are seen as a positive for a company that comes from the reputed Tata stable.

“I do not think there is a bigger beneficiary in India than Titan from the market point of view,” said Samir Arora, founder fund manager at Singapore-based Helios Capital. Forget the PE part, because it has demolished the competition.

The third biggest company in India is saying it sold fake diamonds.

Who will go to any of these companies anymore It is a bigger gift than normal, because of just the relative positioning of the one company versus the others, Arora told ETNow. Overseas institutional investors hold over 21 per cent stake in the Tata Group firm and domestic mutual funds just over 3 per cent.

The Jhunjhunwalas’ 8.45 per cent stake (as of December 31) was worth Rs 7,400 crore at Tuesday’s stock price.