InCred Equities sees 13% potential upside on this Jhunjhunwala stock. Details here

On a day when the stock market saw a sharp correction, this Jhunjhunwala portfolio stock was almost unfazed. On Tuesday, it settled 0.66 per cent lower at Rs 3,239.75 as against a 5.74 per cent crack in the benchmark BSE Sensex.

InCred Equities released a report on the counter, suggesting a potential upside of around 13 per cent. The scrip is none other than Titan Company Ltd, which is a part of Tata Group. As of March 2024, Rekha Jhunjhunwala -- wife of late ace investor Rakesh Jhunjhunwala -- held a 5.35 per cent stake in the company.

InCred projected Titan shares at a value of Rs 3,655, hinting at a 12.82 per cent upside when compared with today's closing price of Rs 3,239.75.

"Titan targets a 15-20 per cent topline growth over FY24-FY27F led by the jewellery & watches segments and scale its emerging businesses. Margins may remain under pressure, with the jewellery/watches divisions expected to clock 12 per cent/12.5 per cent growth, respectively, in the medium term. Retain ADD rating with a lower TP of Rs3,655 (61x Mar 2026F EPS) vs. Rs4,060 earlier, on weaker near-term narrative. Long-term story stays intact," the brokereage stated.

"By FY27F, Titan's management targets a 5 per cent contribution from the international business (2 per cent currently). Tanishq, Mia and Titan stores have performed well in the international market. Caratlane and Zoya will follow suit. The jewellery business has been witnessing pressure from rising gold prices, owing to which the products have been re-engineered to lightweight offerings to drive growth as well as higher competitive intensity," it also mentioned.

Titan's watch division has a stronger position in the Rs1k-5k and Rs5k-Rs25k price segments, where it holds 48 per cent/54 per cent market share, respectively, currently (targeting 53 per cent/64 per cent by FY26F) and will shift the focus to increase its share in the greaten-than 25k price segment as well as the sub-Rs1k segment, where it has a 6 per cent/8 per cent market share, respectively (targeting 11%/9% in FY26F), InCred added.

"The eyecare business is targeting an EBIT margin of 12.5 per cent by FY27F (vs. the earlier target of 18 per cent by FY26F) and will focus on making the range more affordable, expand play in sunglasses and progressive lenses and premiumisation of its top 108 stores (c.40% of division sales) to drive growth," it further stated.

InCred, however, cited the company's slower-than-expected EBITDA (Earnings before interest, taxes, depreciation and amortisation) growth as downside risks.