Jhunjhunwala's Favourite Titan Shares Tank; Experts See 20% Gains, Should You Buy?

Rakesh Jhunjhunwala Portfolio Stock: Titan Company’s share price slipped in early trade on April 7 a day after the company came out with its fourth-quarter business data. The stock opened 1 per cent lower at Rs 2,517 against the previous close of Rs 2541.25 on BSE. With a market capitalisation of more than Rs 2,20,000 crore, the shares stand higher than 100-day and 200-day moving averages but lower than 5-day, 20-day and 50-day moving averages.

Long-term investors have made big gains by investing in this stock as it has surged over 400 per cent in the last five years and has zoomed around 900 per cent in the last ten years.

Titan Company finished the quarter on a satisfactory note despite Q4 FY22 getting disrupted twice – first due to the partial lockdowns caused by the Omicron wave in January and again in March in which consumer sentiments got affected adversely due to (a) sharp increase and volatility in gold prices and (b) uncertainty due to a fragile geopolitical situation, the company said in its press release.

“The underlying demand continued to be strong across all of its businesses with most segments posting year-on-year growth over a very strong Q4 FY21 base,” the company said.

The network expansion and campaigns have continued to progress well in anticipation of an upbeat Q1FY23 which is expected to be normal after a gap of two years of lockdowns in the same period, it added.

The company’s jewellery division revenue was down 4 per cent on-year. The watches and wearables division revenue rose 12 per cent and eyecare segment revenue was up 5 per cent. Revenue from other businesses rose 23 per cent in the quarter ended March 2022.

Should You Buy, Hold or Sell Titan Shares?

Parbhudas Liladher: Buy

Target price: Rs 2,754; Upside 8 per cent

The brokerage firm believes that Titan is well placed to capitalise on LT growth led by benefit of hallmarking; Omni-channel strategy across jewellery, watches and eyewear, and new growth drivers like Caratlane, Titan Eye+, Taneira. Entry into high growth segments like headphones and Truly Wireless earphones is another positive for the Tata Group company. “We estimate 21% PAT CAGR over FY22-24 and arrive at a DCF based target price of Rs 2,754 (Rs2832 earlier)”. It retains Buy call on the stock saying that although structural story remains intact, participants much expect back ended returns given rich valuations.

Motilal Oswal: Buy

Target price: Rs 2,910; Upside 15 per cent

The brokerage house said, “A combination of Omicron wave in Jan’22, a steep gold price increase and the adverse impact of uncertain geopolitical situation in Mar’22 led to a 4 per cent YoY decline in jewellery sales (flat adjusted for B2B order last year) in 4QFY22 as shared in the end-of-quarter update.” While gold prices have stabilized at lower levels by the end of the quarter and wedding demand remains very healthy along with less likelihood of a disruption by any further COVID-wave, there could be some residual impact in 1QFY23E as well, it added. It maintains a ‘Buy’ rating on the stock with a target price of Rs 2,910.

Edelweiss: Buy

Target price: Rs 3,065, Rally 20 per cent

According to Edelweiss Securities, Titan has been among the biggest beneficiaries of the shift from unorganised to organised segment in jewellery. Given its brand heft, as also the trust that the Tata name evokes, the company has managed to outpace other large jewellers. “We expect this trend of market share gains to sustain, driving its multi-decade growth,” it said. Furthermore, Titan is currently only present in around 220 cities, and has a target to extend its presence to 500-plus over the next five years. “While the performance is below trend, it is attributable to one-off factors with the underlying structural growth unchanged. We believe, any correction in the stock will be an opportunity to buy,” the brokerage added. It maintains a ‘BUY/SO’ rating on the stock with a target price of Rs 3,065, with key risk to the upside being Gold price volatility and muted market share gains.

At 12:22 pm, Titan Company was quoting at Rs 2,479.60, down Rs 60.05, or 2.37 per cent, on the NSE.

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