Gold prices in India continued to surge for the fourth consecutive day on Thursday, November 21, 2024. 24K/10 grams gold is nearing its Rs 80,000 mark. But did you know gold prices have rallied by Rs 14,080 or about 22% year-to-date, giving better returns than giant gold stocks like Titan Company, and Manappuram Finance which are in red broadly? Should you buy either of these gold stocks or continue to invest in yellow metal?
Gold Prices In India:
24K of 10 grams of gold surged by Rs 330 to Rs 77,950 on Thursday, while 100 grams of gold is up by Rs 3,300 to Rs 7,79,500.
Further, the 22K gold price is up by Rs 300 to Rs 71,450 in 10 grams and surged by Rs 3,000 to Rs 7,14,500 in 100 grams on November 21. Also, 10 grams and 100 grams of gold in 18k climbed by Rs 240 and Rs 2,400 on Thursday to Rs 58,460 and Rs 5,84,600.
Gold Vs Gold Stocks YTD Performance:
On January 1, 2024, 22K and 24K gold prices in 10 grams stood at Rs 58,550 and Rs 63,870. Since then 10 grams of gold has surged by Rs 14,080 or 22.04% till November 21, 2024 performance. Similarly, 10 grams of 22K soared by Rs 12,900 or 22.03% YTD.
These are better returns than Titan Company, and Manappuram Finance's share price performance YTD.
Titan Company: YTD, the stock has tumbled by 13.51%. Currently, the stock price is at Rs 3,178.70 apiece, which is lower compared to the price level of Rs 3,675.05 recorded on January 1, 2024.
Manappuram Finance: This stock has plunged by 12.3% YTD. Currently, it trades at Rs 150.20 apiece on November 21, compared to the price level of Rs 171.25 apiece on January 1, 2024.
Titan is the leader in gems and jewellery segment in India in terms of market share, and that Manappuram Finance is among the leading gold loan services providers.
What should investors buy?
Gold In India: As per Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, amid increased global concerns, the price of gold broke a six-day losing skid, attracting some haven flows after registering its largest weekly decline in almost three years last week. The employment of long-range missiles by Ukraine within Russia was approved by US President Joe Biden. The decision was made in response to the deployment of thousands of North Korean soldiers to aid Moscow's military effort.
Kothari added, As anticipated, the gold price started to rise again after November 14, when a "hammer" appeared on the daily charts, signalling the start of a recovery. Gold has retraced 50% of this rally from Rs 67500 to Rs 80000 and prices have shifted from overbought zone to oversold zone. These dips should be used as a buying opportunity as Gold is expected to continue its rebound.
Gold prices in India have already touched Kothari's target of Rs 76500 and Rs 77000 in 24K gold price of 10 grams this week.
On November 1, 2024, gold price of 24K and 22K in 10 grams touched their all-time high of Rs 80,560 and Rs 73,850 respectively.
Titan Company: At the latest brokerage Emkay Global has recommended BUY with a target price of Rs 4,050.
Emkay's note said, " TTAN remains watchful of the emerging trends around LGD and did not call off venturing into the space. Among other segments, Watch/TEAL/CaratLane surprised positively with 21%/26%/119% EBIT growth in Q2, whereas Eyewear/Emerging saw an EBIT decline. Margin miss in Q2 was due to a drop in the studded mix and higher gold coins/gold-component in studded, leading to a reduction of jewellery margin outlook to 11-11.5% in FY25 (vs 11.5-12.5%) and a 7-8% cut in our earnings. But, sustained growth trends/long-term execution keeps us positive on TTAN with a revised TP of Rs4,050 (65x Sep-26E EPS). Evolving LGD space and high competition offer margin risks, and we will remain watchful on these fronts."
Manappuram Finance: Brokerages like Axis Direct and IDBI Capital have recommended HOLD on this NBFC gold stock for a target price of Rs 170 and Rs 176 ahead. This could mean that there is a potential 13-17% upside in Manappuram Finance ahead.
Axis Direct's note said, "We believe near-term headwinds on growth and overall profitability will continue given the restrictions on Asirvad MFI's disbursements. However, the company will look to continue its growth journey in the core gold and secured non-gold portfolios. The management indicated that repayments from the Vehicle/MSME/Housing portfolio are expected to improve from Q4FY25 onwards, with green shoots visible in early Q3FY25. We expect Manappuram's RoA to be capped at 4.3% over FY25-26E factoring in higher credit costs, lower NIMs and increased Opex given aggressive collection efforts, before improving to ~4.6% by FY27 as conditions normalise."
Haven assets continue to gain traction amidst the latest escalation in the war between Russia and Ukraine. After Ukraine's long-range missile attack on the deep Kremlin, Russia reportedly launched an intercontinental ballistic missile overnight which targeted Dnipro city, situated in the central east region of Ukraine.
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