Rakesh Jhunjhunwala Portfolio Stock: Titan Company’s stock price plunged in early trading on April 7, a day after the company released its fourth-quarter company data. The stock opened 1 percent lower at Rs 2,517 against the previous close of Rs 2541.25 on BSE. With a market cap of over Rs 2.20,000 crore, the shares are above the 100 and 200 day moving averages but below the 5 day, 20 day and 50 day moving averages.
Long-term investors have made big gains by investing in this stock as it has risen more than 400 percent in the past five years and is up about 900 percent in the last ten years.
Titan Company ended the quarter satisfactorily despite Q4 FY22 being disrupted twice – first due to the partial lockdowns triggered by the Omicron wave in January and again in March, with consumer confidence negatively impacted by (a) sharp rise and volatility in gold prices and (b) uncertainty due to a fragile geopolitical situation, the company said in its press release.
Underlying demand remained strong across all of its businesses, with most segments showing year-over-year growth on very strong foundations in the fourth quarter of FY21.
Network expansion and campaigns continued to progress well ahead of an optimistic Q1FY23, expected to return to normal after a two-year hiatus from lockdowns over the same period, it added.
The company’s jewelry division declined 4 percent year-on-year. Sales of the watches and wearables division increased by 12 percent and sales of the eye care segment increased by 5 percent. Revenues from other companies rose 23 percent in the quarter ended March 2022.
Should You Buy, Hold or Sell Titan Shares?
Parbhudas Liladher: Buy
Target Price: Rs 2,754; Upward 8 percent
The brokerage firm believes Titan is well positioned to capitalize on LT’s growth, led by the hallmark advantage; Omnichannel strategy for jewelry, watches and eyewear, and new growth engines such as Caratlane, Titan Eye+, Taneira. Entry into high-growth segments such as 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 maintains a Buy call on the stock and says that while the structural story remains intact, participants expect plenty of back-end returns given the rich valuations.
Motilal Oswal: Buy
Target Price: Rs 2,910; Upward 15 percent
The brokerage said: “A combination of an Omicron wave in Jan’22, a sharp rise in gold prices and the adverse impact of the uncertain geopolitical situation in Mar’22 led to a 4 percent year-over-year decline in jewelry sales. (flat adjusted for B2B orders. last year) in 4QFY22 as shared in the quarter-end update.” While gold prices stabilized at lower levels towards the end of the quarter and wedding demand remains very healthy and less likely to be disrupted by a further COVID surge, there may also be some residual impact in 1QFY23E, it added. It maintains a ‘Buy’ rating for the stock with a target price of Rs 2,910.
Target price: Rs 3,065, rally 20 percent
According to Edelweiss Securities, Titan has been one of the biggest beneficiaries of the shift from a disorganized to an organized segment in jewelry. Given the weight of the brand and also the confidence that the name Tata evokes, the company has managed to outperform other major jewelers. “We expect this trend of market share gains to continue, fueling growth over several decades,” it said. In addition, Titan is currently only present in about 220 cities and aims to expand its presence to more than 500 over the next five years. “While the performance is below trend, it is due to one-off factors where the underlying structural growth has remained 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 the main risk being the gold price volatility and moderate market share gains.
At 12:22 PM, Titan Company was trading at Rs 2,479.60, down from Rs 60.05 or 2.37 percent on the NSE.
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