1:1 Bonus, 1:10 Split: Tata's Gems & Jewellery Stock Makes Investors Crorepati, BUY For Highest TP Of Rs 4,354

Tata Group-backed Titan Company is shining since the start of March 2024, flirting near its all-time high. Titan is a leader in the segment of gems and jewellery and is currently just away by a little over Rs 130 from hitting its record levels. The stock has given tremendous returns in the long run. Especially, its stock split and bonus issue helps investors hedge massive gains in Titan in 13 years. Titan is expected to shine further, even crossing the Rs 4,100 mark as well.

On BSE, Titan's share price stood at Rs 3,752.90 apiece, up by 0.6% on March 5th. It currently has a market cap of Rs 3,33,177.27 crore.

In a year, Titan shares have zoomed by 56%. But in 5 years, Titan emerges as a multi-bagger with gains of nearly 256%. But in 13 years, Titan has skyrocketed by a whopping 2,078%.

13 years ago, Titan was at Rs 172 levels on March 4, 2011. So if you had invested Rs 1 lakh in Titan at that time, you would have held 581 shares of the company.

But a stock split and bonus issue just multiplies your growth. So far, Titan has carried only 1 bonus issue and 1 stock split.

Bonus issue: The first bonus issue was of ratio of 1:1 with effect from June 23, 2011. This means Titan issued 1 stock as a bonus on the existing 1 stock.

So on your 580 shares of Titan, you would have received another 580 bonus shares (580x1/1). This will total your shareholding to 1,160 shares.

Stock Split: Titan also went ex-split on June 23, 2011, for the ratio of 1:10. This means that the face value of Rs 10 was trimmed to Rs 1/

After the bonus issue, your 1,160 shares will be split into ten new shares, hence further multiplying your investment. Adjusting to stock split you will receive 11,600 equity shares (1,160 X 10).

Assuming you have not sold your shares since March 4, 2011, then currently your corpus value will be Rs 4,35,33,640 (11,600 x CMP of Rs 3,752.90). It needs to be noted that this is just an example, but your gains and shareholding will multiply according to the number of shares and investments you made in the pre-and-post-stock split and bonus issues.

Currently, the highest target price on Titan is Rs 4,354. And if you still held Titan shares to whenever this potential mark is achieved, then going by the example, your investment corpus will rise to Rs 5.05 crore.

At the latest, leading brokerage CLSA has set a target price of Rs 4,354 per share on Titan while maintaining buy. The outlook is positive.

Meanwhile, other brokerages also expect Titan to hit the Rs 4,100 mark. Currently, Antique Stock Broking has a target price of Rs 4,100 on Titan, while Sharekhan earlier set a target price of Rs 4,112.

Further, as per Trendlyne data, the consensus recommendation from 30 analysts for Titan Company Ltd. is BUY. EPS is expected to grow by 10.0% in FY24.

Among other key fundamentals for Titan, highlighted by Trendlyne are -- Debt to Equity Ratio of 0.63 is less than 1 and healthy, implying that its assets are financed mainly through equity; Return on Equity(ROE) for the last financial year was 27.42%, more than 20% in the last financial year, indicating an efficient use of shareholder's capital to generate profit; Promoter Pledges are zero; Interest Coverage Ratio is 17.29, higher than 1.5, meaning that it can meet its interest payments comfortably with its earnings (EBIT); and Mutual Fund Holding increased by 0.26% in the last quarter to 5.54.

Titan is also a dividend-paying stock. Since June 2001, the company has delivered up to 23 dividends. At the latest, the company paid dividends of up to Rs 10 per share in the last 12 months.

Titan (Consolidated) recorded an income growth of 24% in Q3FY24 compared to Q3FY23. PAT meanwhile stood at Rs 951 crore, up by 9.4% YoY.

Titan Company is a joint venture between the Tata Group and the Tamilnadu Industrial Development Corporation (Tl DCO), which commenced its operations in 1987 under the name Titan Watches Limited. Over the last three decades, Titan has expanded into underpenetrated markets and created lifestyle brands across different product categories including fragrances (SKINN), accessories Indian dress wear (Taneira) and thoughtfully designed Women's Bags (IRTH). Titan is widely known for transforming the watch and jewellery industry in India and for shaping India's retail market by pioneering experiential retail.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.