Rakesh Jhunjhunwala Portfolio: Brokerages bullish on this stock, up over 100% in one year

Shares of Titan Company Limited have doubled investors' money in the last 12 months. The stock rose 2 per cent to hit an intraday high of Rs 2,449.90 on the Bombay Stock Exchange (BSE).
 
It has surged from the Rs 1,168 mark to touch Rs 2,449.90. The large-cap stock has gained 109 per cent in the last one year and has risen 56 per cent since the beginning of this year.
 
With a market capitalisation of more than Rs 2,16,000 crore, the shares stand higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
 
The Tata group company reported a 222 per cent year-on-year (YoY) rise in its net profit at Rs 641 crore for the quarter ended September 2021 on the back of a strong recovery in its consumer business. Profit in the year-ago period stood at Rs 173 crore.
 
Total Income grew 65 per cent to Rs 6,571 crore in the September quarter compared to Rs 3,983 crore in the year-ago period.
 
"On the auspicious day of Dhanteras, we expect strong demand as gold prices are in a range-bound mode and below all-time levels. It will increase consumer confidence and will benefit Titan. The stock is likely to outperform in the long term and investors should hold the stock," Akhil Rathi, Vice President Advisory at Marwadi Shares and Finance Limited told BusinessToday.In.
 
"The jewellery division witnessed a demand resurgence and made a strong recovery as compared to last year and also the other segments, which include watches, wearables and eyewear saw strong recovery. The company's all stores are fully operational and we expect the company to return to pre-pandemic normalcy," he added.
 
Brokerage View
 
The brokerages have maintained a bullish stance on the stock and expect an improvement in sales growth going ahead.
 
Macquarie has raised its target price on the stock to Rs 3,000 from Rs 2,780 per share. The brokerage firm has raised the earnings per share estimate for the company by 13 per cent for FY22 to factor in higher-than-expected Q2 earnings.
 
"The company has strong cash kitty of over Rs. 2,000 crore. Strong working capital management, improved gold hedging policy and expected improvement profitability will help in improving cash flows (to cross Rs. 4,000 crore in FY24) in the coming years," Sharekhan said in a report.
 
"A structural shift to trusted brands in the jewellery space, large omni-channel opportunities in watches and jewellery business and increase in ticket size for occasional purchases will drive higher sales and provides a large scope for margin expansion in medium to long term," it added.
 
Prabhudas Lilladher believes that 1) strong wedding jewellery demand, improved mix and benefits of hallmarking in jewellery 2) aggressive store expansion of 250-300 in eyewear 3) acceleration in store openings in watches and 4) scale-up in emerging businesses like Taneira and wearables will be major growth drivers for Titan going forward.
 
"We have revised our FY22/23E revenue estimates upward to factor in the sharp increase in demand. In Q2, EBITDA margins were significantly higher, hence, we have upward revised our margin estimates for FY22E," Dolat Capital said in a report.
 
As the markets have re-opened, the brokerage firm expects an improvement in sales growth going ahead. Higher growth in the jewellery segment would be driven by (1) pent-up demand and (2) buying ahead of the festive season.
 
Big Bull's favorite bet
 
Titan is considered one of the favorite stocks of India's ace investor and Dalal Street veteran, Rakesh Jhunjhunwala. As per the latest shareholding pattern, Jhunjhunwala and his wife Rekha have increased their stake in Titan Company Ltd for the first time in seven quarters.
 
According to the shareholding pattern on BSE, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold 4.87 per cent stake in the company.
 
For the quarter ended September 2020, Jhunjhunwala and his wife held a 5.5 per cent stake in the Titan Company. They reduced the stake to 5.3 percent in December 2020. They further reduced it to 5.1 per cent in March 2021.
 
At the end of the June quarter, the couple's stake in Titan stood at 4.8 per cent.
 
Speaking at the 19th edition of the India Today Conclave 2021, the Big Bull shared that his stock buying decisions are solely based on the risk-reward ratios.