Rakesh Jhunjhunwala’s portfolio stock Titan Company posted nearly 8 per cent on-year fall in standalone net profit to Rs 491 crore during the January-March quarter. The company’s board also announced a dividend of Rs 7.50 per equity share. Even as Titan posted weak quarterly earnings on pandemic-related restrictions on physical shops and volatility in gold prices, at least three brokerage firms are bullish on the stock, and see up to 22 per cent potential upside.
Ace investor Rakesh Radhyshyam Jhunjhunwala held 3.53 crore shares or 3.98 per cent stake, at the end of March quarter, from 3.75 crore shares or 4.23 per cent stake in Titan Company in December quarter, according to the shareholding pattern of the public shareholders. His wife Rekha Jhunjhunwala owned 95.40 lakh shares or 1.07 per cent stake in Titan. Jhunjhunwala and his wife own 5.05 per cent stake in the Tata group company. With Rs 7.50 per share dividend, Rakesh Jhunjhunwala and his wife may earn Rs 37.87 crore.
Motilal Oswal Financial Services has recommended to buy Titan shares with a price target pegged at Rs 2,900 apiece, up 22 per cent from last close. The brokerage firm noted that Titan has a strong growth runway, given its market share of less than 10% and continued struggles faced by its unorganized and organized peers. Its medium-to-long-term earnings growth visibility is nonpareil. “Despite the volatility in gold prices and COVID-led disruptions, its earnings CAGR has been stellar (24%) for the past five-years ending FY22. We expect this trend to continue, with over 20% earnings CAGR in the next couple of years. The stock’s near-term multiples appear expensive, but its long runway for profitable growth warrants premium multiples,” it added.
Titan also deals in watches and wearables, eyewear, perfumes, among other products, which helped support its performance during the quarter. The watches & wearables business reported income of Rs 622 crore, a 12% growth.
Analysts at Prabhudas Lilladher see over 13 per cent upside in the stock, with target price at Rs 2,701 apiece. “Titan is well placed to capitalize on long term growth opportunities led by jewellery share gains due to network expansion, regional thrust and hallmarking benefits; Omni-channel strategy across jewellery, watches and eyewear; and new growth drivers like Caratlane, Titan Eye+, Taneira and 4) entry into high growth segments like wearables such as smart watches, over the head headphones and Truly Wireless earphones,” they said.
ICICI Securities has given an ‘add’ rating to the stock, with a price target of Rs 2,387 apiece, a 7 per cent upside. “We retain ‘add’ with a DCF-based revised target price of Rs 2,550 (was Rs 2,750 earlier). Key downside risks are irrational competitive environment and potential shift to fixed making charges that could limit long-term benefits from operating leverage.