This Rakesh Jhunjhunwala portfolio stock hits lifetime high; still attractive bet for investors

Rakesh Jhunjhunwala portfolio stock: Titan share price rallied over 3 per cent on Monday to hit its fresh lifetime high of Rs 971.50 on the BSE after the jewellery firm said FY17-18 was a very satisfactory year in terms of overall business performance. The company achieved excellent retail growth in all businesses, Titan said. The stock has been a consistent performer in terms of stock price. Titan shares are up nearly 100 per cent in last one year, while it rallied 141 per cent in the last three years. Brokerage Motilal Oswal Securities still sees over 16 per cent rally on the stock. The stock continues to be their top consumption pick, notwithstanding the near-term expensive valuations. 

MOSL has a buy rating on the stock with a target price of Rs 1,090, an upside of 16 per cent on the BSE. The target price is based on 55 times its Mar’20E EPS, a 33 per cent premium to the three-year target price because of strong pace of earnings growth. 

Brokerage sees earnings to record a compound annual growth rate (CAGR) of 26 per cent between FY18 and FY19. The sheer scale of top-line opportunity demands premium valuations, it added. 

"Regulations governing the segment, including identity proofs for all transactions over Rs 200,000, GST implementation and crackdown on black money, have tilted trade decisively in favor of organized players, among which Titan is a dominant player in terms of scale and trust. Recent aggression to capitalise on the massive opportunity is also heartening," said MOSL in a research report dated April 9, 2018.

Global brokerage Morgan Stanley (MS) has an 'overweight' rating on the stock with a target price of Rs 1,050 per share. MS estimated an overall earnings growth of 55 per cent for Titan for Q4 and sees strong performance in jewellery & watch segment.   

The stock is trading at a 12-month trailing PE multiple of 85.42. Talking about shareholding pattern, promoters own 52.91 per cent stake in the company. Institutional investors has 26.93 per cent stake, while government has a meagre 0.18 per cent stake. Ace investor Rakesh Jhunjhunwala owns 8.56 per cent stake in Titan. Major portion of Jhunjhunwala's portfolio is invested in Titan, which is considered to be his favourite stock. 

Q4FY18 earnings

4QFY18 turned out to be a good quarter for the Jewellery division, with retail growth coming in at mid-teens, despite no new collection launch. Growth was driven by successful diamond jewellery activation and the revised gold exchange policy. Watches performed strongly in the quarter, aided by the multi-brand and e-com platforms. Prescription Eyewear, too, sustained its growth momentum, while Sunglasses business continued to suffer.