Shares in Rakesh Jhunjhunwala’s portfolio: Titan Company’s stock price fell in early trading on April 7, a day after the company released its fourth-quarter trading data. The stock opened 1% lower at Rs 2,517 against the previous close of Rs 2,541.25 on BSE. With a market cap of over Rs 2.20,000 crore, the shares are above the 100-day and 200-day moving averages but below the 5-day, 20-day and 50-day moving averages.
Long-term investors have made big gains investing in this stock, as it has jumped more than 400% in the last five years and soared around 900% in the last ten years.
Titan Company ended the quarter on a strong note despite a twice disrupted fourth quarter of FY22 – first due to partial lockdowns caused by the Omicron wave in January and again in March during which sentiment consumers were negatively affected due to (a) a sharp increase and volatility in gold prices and (b) uncertainty due to a fragile geopolitical situation, the company said in its press release.
“Underlying demand remained strong across all of its businesses, with most segments posting year-over-year growth on a very strong basis in the fourth quarter of FY21,” the company said.
Network expansion and campaigns continued to progress well in anticipation of an optimistic Q1FY23 that should be normal after a two-year lockdown gap over the same period, he added.
Revenue for the company’s jewelry division was down 4% year-on-year. Sales in the watches and wearables division increased by 12% and sales in the eyecare segment increased by 5%. Revenue from other activities increased 23% in the quarter ended March 2022.
Should you buy, hold or sell Titan stock?
Parbhudas Liladher: Buy Now
Target Price: Rs 2,754; 8% increase
The brokerage firm believes that Titan is well positioned to capitalize on LT’s growth through punching benefits; Omnichannel strategy on jewelry, watches and eyewear, and new growth engines like Caratlane, Titan Eye+, Taneira. Another bright spot for the Tata Group company is the entry into high-growth segments like Truly Wireless headphones and earphones. “We estimate a PAT CAGR of 21% FY22-24 and arrive at a DCF-based target price of Rs 2,754 (Rs 2,832 earlier).” He maintains the buy call on the stock by saying that while the structural story remains intact, participants have high expectations for backward returns given the rich valuations.
Motilal Oswal: Buy
Target price: Rs 2,910; Up 15%
The brokerage said: “A combination of the Omicron wave on January 22, a sharp increase in the price of gold and the negative impact of the uncertain geopolitical situation on March 22 resulted in a decline of 4% year-over-year jewelry sales (fixed adjusted for B2B order last year) at 4QFY22 as reported in the quarter-end update. While gold prices stabilized at lower levels at the end of the quarter and marriage demand remains very healthy with less likelihood of disruption by a new wave of COVID, there could also be a residual impact at 1QFY23E, he added. It maintains a “Buy” rating on the stock with a target price of Rs 2,910.
Target Price: Rs 3,065, 20% rally
According to Edelweiss Securities, Titan has been among the biggest beneficiaries of the move from the unorganized to the organized segment in the jewelry industry. Given its brand weight, as well as the confidence that the Tata name evokes, the company has managed to outpace other major jewelers. “We expect this trend of market share gains to continue, driving its growth over several decades,” he said. Additionally, Titan currently only has a presence in about 220 cities and aims to expand its presence to over 500 over the next five years. “While the performance was below trend, it was driven by one-off factors with underlying structural growth unchanged. We believe any correction in the stock will be a buying opportunity,” the brokerage added. maintains a ‘BUY/SO’ rating on the stock with a target price of Rs 3,065, with the main upside risk being gold price volatility and muted market share gains.
At 12:22 p.m., Titan Company was trading at Rs 2,479.60, down Rs 60.05, or 2.37%, on the NSE.
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