Rakesh Jhunjhunwala stock: 18% upside seen in Titan Company; know what is ticking for this stock?

Rakesh Jhunjhunwala-backed Titan Company is likely to see upside of 18 per cent, as per the estimates by Philip Capital. The brokerage lists various positives. The stock on Friday was trading negatively and was down by over 4.5 per cent to Rs 2455 apiece on the BSE intraday. 

Philip Capital puts it a top pick in consumer discretionary segment. The brokerage firm maintains BUY rating on Titan Company with a target of Rs 3,000 per share (70x FY24 EPS) and points out the company’s margins will remain high for the next two quarters due to the following four reasons: 

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1) Diamond prices are up more than 40% – the entire benefit of higher prices (studded jewellery contributes 30 per cent of Titan’s jewellery sales) will flow to its bottom-line.  

2) Marriages, festivals, and social functions are on at full swing, as the government has relaxed covid restrictions. This should boost discretionary spending, specifically, high-margin jewellery. 

3) Mandatory implementation of hallmarking norms from December 1, 2021 will be a major harbinger of formalization.  

4) If the current geopolitical tension continues for a while, investment demand for gold coins and bars could return; gold is considered the safest and most liquid asset. 

Philip Capital believes, there is limited downside risks to Titan’s stock price, even if markets correct. It is because of expectations of strong performance over the next two quarters.  

However, the medium-term optionality value built into two initiatives – aggressive expansion into online jewellery retailing and incubation of large categories such as sarees among others.  

Billionaire investor Rakesh Jhunjhunwala held over 5 per cent stakes aggregating to 45,250,970 equity shares in the company, as per the latest shareholding pattern available on exchanges. Rakesh Jhunjhunwala along with his wife and associates publicly holds 37 stocks, as per corporate filings. 

At around 01:36 pm, the stock is trading over 3 per cent lower to Rs 2495 per share on the BSE, as compared to 0.50 per cent fall in the S&P BSE Sensex. The stock in the last one month has gained meagre 1 per cent, while it has reported growth of around 24 per cent in 6 months on the BSE.