Titan: Rakesh Jhunjhunwala-Backed Tata Stock Is A Jewel, 290% Returns In 5 Years; More Gains Ahead!

Titan Company is a dominator in the gems and jewellery segment. The stock is a jewel and the late big bull Rakesh Jhunjhunwala knew this. Hence, even though the popular market mogul of India is gone, his investment in Tata stock reaps fruit still. Titan Company is currently below Rs 3,800 and has a potential of crossing Rs 4,100. The stock is a multi-bagger with nearly 290% returns in 5 years.

Titan is set to declare its Q3 results for FY24 on February 1. But the company has already declared its operational performance for the quarter.

As per the regulatory filing, Titan registered Revenue growth of 22% YoY in Q3FY24. A total of 90 stores were added in this period, taking the group's retail presence to 2,949 stores.

Its jewellery division's domestic growth of c.21 % YoY was led by double-digit buyer growth and moderate improvement in average selling prices. The growth in gold (plain) and coins in this festive quarter notably exceeded
the studded sales growth is driven by higher consumer interest in gold despite elevated prices and volatility.

Further, its Watches & Wearables (W&W) Division's domestic business grew c.23% YoY comprising of c.18% Revenue growth in the Analog watches and c.64% growth in Wearables. While EyeCare Division Revenue declined by c.3% YoY. Titan Eye+ opened two new stores in the GCC region, one each in Dubai and Sharjah with no incremental additions (net) during the quarter.

Also, Caratlane Revenue grew by c.31 % YoY led by the season's new collections, wedding gifting curations and the first ever 'mangalsutra' campaign. Studded segment grew well clocking a growth of c.39% YoY. Business added 16 new domestic stores in this period expanding the network presence to 262 stores.

As per Trendlyne data, Rakesh, who was called as the Warren Buffett of India by investors, first bought Titan shares nearly a decade ago. Jhunjhunwala picked 16,791,575 shares or 1.89% of Titan in the December quarter of 2015. Since, while he was alive, he made notable adjustments to Titan shares. After him, his wife Rekha is the leading public shareholder in Titan.

As of December 31, 2023, Rekha holds 47,695,970 equity shares or a 5.4% stake in Titan. This stock is the most valued in Jhunjhunwala's portfolio. The majority chunk of her net worth is from Titan stock. As of January 20, 2024, Rekha's shareholding in Titan is valued at over Rs 18,051 crore.

Hence, Titan continues to reap gains Jhunjhunwala despite near-term or periodic hiccups in the performance. In the long term, Titan is a wealth-creating stock.

Titan is still a jewel as there is potential for more gains.

After the Q3 operational performance, Sharekhan said, "Titan is eyeing a revenue CAGR of over 20% during FY2022-FY2027 led by an ambitious growth plan in the medium term. Though this will have some hit on margins initially, it expects consistent growth and improved mix to drive margins in the long run."

Further, Sharekhan's note added, "Strong growth outlook, focus on sustained market share gains, and strong balance sheet makes it the best play in the discretionary space. The stock is currently trading at 46x and 40x its FY2025E and FY2026E EV/EBITDA, respectively. We maintain our Buy recommendation on the stock with a revised price target (PT) of Rs. 4,112 (rolling it over FY26E earnings)."

Among key risks, Sharekhan's note said, volatile gold prices or a slowdown in key business verticals would act as a key risk to their earnings estimates.

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.