Rs 43.45/Dividend: Tata's Jewellery Stock Is Multibagger Of Rahul Gandhi, 1300% Rise In 10-Years; Time To Buy?

The 2024 general election in India is nearing this month, and candidates have started to flood in with their applications. One of them is Rahul Gandhi, an Indian Politician from the Congress Party whose deep roots are tradition old since the Independence of the country. Representing the constituency of Wayanad, Kerala, Rahul Gandhi has also filed an affidavit at the Election Commission of India.

In that affidavit, Gandhi revealed his investments, income, and assets. It turns out Gandhi is also among stock market enthusiasts, holding about two dozen stocks. He has a diverse portfolio with FMCG, IT, gems & jewellery, chemical, pharma, engineering, and other stocks.

Although, Gandhi's most valued investment is in Pidilite Industries, Bajaj Finance, Asian Paints, and Nestle, one that caught our eye would be Titan Company, the same gems & jewellery giant of Tata Group that has been a darling stock for many ace investors including late Rakesh Jhunjhunwala.

The Jhunjhunwalas continue to hold Titan shares which is their most valued stock in their over Rs 52,341.48 crore worth portfolio as of now. Of this total net worth, 34% is from Titan Company to Jhunjhunwalas. Titan has not just sparkled on Jhunjhunwala's portfolio but many more investors including Tata Group itself.

Titan has emerged as a multibagger for Rahul as well, especially after his competitor Prime Minister Narendra Modi took the reign of India in 2014.

In a decade, Titan shares have rallied to a mind-boggling 1,308%. The stock price was at Rs 269.95 apiece on April 4, 2014. And currently, it touched the Rs 3,800 mark on April 5, 2024. In 10 years, Titan also paid dividends up to Rs 43.45 per share cumulatively.

Titan's market cap is over Rs 3.33 lakh crore. As per the affidavit, Rahul holds 897 shares of Titan worth Rs 32,58,980 as of March 15, 2024.

After hitting an intraday high of Rs 3,800 apiece on BSE, Titan shares traded at Rs 3,750.50, down by 0.9% as of now on April 5. Nonetheless, Titan was still closer to its 52-week high of Rs3,885 apiece, while trading higher by 47% from its 52-week low of Rs 2,545 apiece.

There is room for more upside and just like Jhunjhunwalas and Tata Group, Rahul is in a sweet spot for more gains in Titan ahead. Titan shares are expected to cross the Rs 4,000 mark, and the latest to recommend buying is Motilal Oswal.

Titan Share Price Recommendation:

Motilal Oswal in its latest report, highlighted notable key factors for Titan Company. They are:

1. While Titan continues to expand its store network, it is also focusing on better execution at the existing stores (added ~340 jewellery stores in the last two years). TTAN has reduced the gold premium compared to peers in a calibrated manner, which has been compensated with other initiatives to protect the operating margin.

2. Titan's management believes that jewelry's EBIT margin of 12-13% is sustainable despite rising competition. LGDs have seen success in many developed countries, yet TTAN is not sure it would participate in LGDs.

3. In the long run, Titan expects to sustain healthy growth on the back of the following structural drivers: (1) increasing urban population to expand the
company's target users and store addition opportunity, (2) TTAN's rising consumer base (45-50% new buyers contribution) and multiple jewellery brands for different income groups, (3) fast-changing consumer preferences (unorganized to organized shift), (4) scope of market share gain (still at 7- 8%), and (5) rising women/young workforce.

4. Titan is a consumer-centric company with a focus on building trust by enhancing the consumer experience. It does not compromise on the consumer experience even during the peak days of the festive season. TTAN also has strong bonds with its franchise partners and supports them during challenging times (as seen during the Covid pandemic).

5. Over the years, TTAN has captured consumer preference and gained their confidence by implementing a multi-brand strategy in-store expansion to cater to all kinds of customers across mid-premium to luxury segments.

Accordingly, Motilal Oswal's note said, "We model a CAGR of 17% in revenue, 23% in EBITDA, and 26% in PAT during FY24-26. TTAN's valuation is rich but its superior competitive positioning (sourcing, studded ratio, consumer trust, youth-centric, reinvestment) and business moats are not easily replicable. We maintain our BUY rating with a TP of INR4,300 based on 65x FY26E EPS."

From the current price level, Titan has a potential of 15% upside. Notably, this Tata gems and jewellery company is a leader in its segment and has a strong track record of dividend payout. Since July 2001, Titan has delivered 23 dividends, as per Trendlyne data with a current dividend yield of 0.27%. While the stock carried a 1:10 sub-division in June 2011 alongside 1:1 bonus shares in that same year.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.