Rakesh Jhunjhunwala Portfolio: Despite muted fourth-quarter earnings for the financial year 2021-22 (Q4FY22), the brokerages see up to 31 per cent upside in Rakesh Jhunjhunwala’s favourite Tata Group stock – Titan Company.

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Titan on May 3, 2022, reported a 7.21 per cent decline in its consolidated net profit at Rs 527 crore in Q4FY22 as compared to Rs 568 crore in a year-ago quarter. While its revenue from sales dipped too by 1.14 per cent to Rs 7,267 crore in Q4FY22 as against Rs 7,351 crore a year ago.

According to ShareKhan, “Titan’s Q4 performance was affected by multiple factors. It has geared for expected high sales during the auspicious days and postponement of the wedding season, which will help in posting good performance for the jewellery business in Q1FY23 and the quarters ahead.”

While the jewellery business is expected to post consistent double-digit growth, other businesses (including watches and eye care) are expected to scale-up fast with revamped strategies, it said, adding further that Titan is well poised to achieve strong revenue and PAT CAGR of 19% and 28%, respectively, over FY2022-FY2024.

“The stock is currently trading at 73.4x and 57.4x its FY23E and FY24E EPS, respectively (EV/EBITDA of 48.9x/38.7x its FY23/FY24E EBITDA). Any correction from the current levels can be considered as a good opportunity to enter the stock from a long-term perspective.”

ShareKhan maintained a Buy recommendation on the stock with an unchanged price target of Rs. 2,900, which implies an upside of around 31 per cent from Friday’s closing price of Rs 2216 apiece.

Similarly, Emkay Research too maintained a Buy stance on Titan with strong earnings growth visibility through low penetration and focus on improving product assortment + profitability turnaround in Eyewear/Caratlane businesses.

The brokerage said the potential share gains from the regionalization strategy can offer more upside and sets a target price of 2,775 per share, (25% upside), valuing Titan at a reduced multiple of 53x due to a 25bps increase in WACC (weighted average cost in capital) and roll-over to Jun’24E EPS.

Billionaire investor Rakesh Jhunjhunwala, who is also called the Big Bull of the Indian stock market, holds 4,48,50,970 equity shares, which aggregates to over 5 per cent stakes in Titan, as per the latest shareholding pattern of the company available on the BSE.