Even though big bull Rakesh Jhunjhunwala saw 2% drop in his wealth from stock investments on Dalal Street during Q4FY19, his most favorite stock Titan Company has continued its upward movement. Gains from Titan now stands over Rs 7,200 crore in Jhunjhunwala’s book as per TrendLyne.com data. Interestingly, Jhunjhunwala reduced slight fraction of his holding in Titan during the quarter, yet his returns from this jewelry maker is immense. Currently, Jhunjhunwala holds 7.04% stake in Titan with 62,451,220 equity shares as on March 2019. Majority of experts have given buy rating on Titan ahead. And one can definitely the company’s upswing trajectory to make Jhunjhunwala richer in nearterm. 

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Here’s what experts have said:

CLSA:

We came back impressed from Titan’s annual analyst meeting where management sounded fairly confident, a welcome change in the context of widespread concern of a consumption slowdown. Acceleration in new store openings, regionalisation strategy, continued share gains, new launches and gold exchange will help jewellery to deliver >20% revenue growth in FY20 and beyond. Watch out for watches as it steps-up its focus on wearables, launches differentiated products & forays in new sub-segments. Commentary on eyewear, fragrances (Skinn) and ethnic wear (Taneira) was equally impressive; O-PF.

In an environment of uncertainty, the strong management outlook is a welcome change. CLSA tweak estimates slightly as we build for acceleration in store openings and moderate our margin forecast. O-PF with a Rs1,225 target price.

HDFC Securities:

While there is no questioning the execution skills of the outfit, its no See’s Candy as Titan operates in a ‘put-upmore-to-earn-more’ industry. ~96% of the cumulative CFO (ex-working capital) has gone towards working capital and capex needs. This acts as gravity to Titan’s punchy valuations of 43x FY21E EPS multiples. Also, the want from growth and its longevity is massive to justify the same. Peers too are expected to catch up on the design and capital curve over the medium to long-term. 

Analysts here said, “Channel check suggests that most big-box jewellers’ performance was a mixed bag (-5 to 20% in 4Q). In this backdrop, Titan’s 4Q performance seems commendable. Big-box peers’ inability to fix their debilitating capital pangs continues to benefit Titan. We largely maintain our EPS estimates FY20/FY21. However, opportunistic aggression in expansion plans by Titan poses an upside risk to our estimates. We maintain our DCF based TP of Rs 990/sh (implying a P/E of 39x FY21E EPS). Reiterate NEUTRAL.”

Dolat Capital:

Sachin Bobade, VP Research along with Nikhat Koor associate here said, “The net revenue grew 19.3% YoY to ` 46.7bn, in line with our estimate. We believe the growth in jewellery segment will continue, despite an unfavorable base, due to new store additions and customer acquisition. Also, as Titan is one of the largest players in the organized industry with attractive products, we believe it will emerge as a winner of the shift from unorganised to organised. Further, the trend of buying jewellery for fashion, instead of investment, will enhance premiumization. We have revised our FY20E and FY21E EPS estimates upward to factor in increased demand. Maintain BUY, with TP of Rs  1,245 (50x FY21E).”

Motilal Oswal:

Due to the margin impact, resulting from higher anticipated store expansion (71 stores v/s 34 in FY19) and targeted sharp increase in exchange sales (up 35%) for the year, there is a slight reduction in FY20 EPS. But, due to better-than-expected targets for jewelry sales growth, there is a minor bump-up in FY21 EPS. For a business that has (a) the best top-line growth visibility in the large-cap FMCG/retail space (20% CAGR in jewelry, the largest segment, over the next four years); (b) prospects of continued EBITDA margins improvement because of high SSSG contribution and (c) sustained ROCE improvement from ~26% in FY19E to 34% in FY19, TTAN’s high valuations are fully justified. In fact, increasing doubts over topline and earnings growth of many consumer peers should also ensure high multiples for TTAN. Maintain Buy with TP of INR1,310 (targeting 50x FY21E EPS).

Overall gain of 13% is around the corner in Titan shares. On Wednesday, Titan shares finished at Rs 1,158.85 per piece up by 0.47%.