Brokerages retain buy on Rakesh Jhunjhunwala’s Rs 7,000 crore bet post-Q3; should you buy?

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Analysts retained their bullish view on Titan Company after it posted nearly 12% growth in consolidated net profit at Rs 530 crore for the third quarter ended in December 2020. It had reported a net profit of Rs 474 crore in the corresponding period last fiscal.

Shares of Titan Company are widely tracked by investors as ace stock picker Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together held 5.32% stake, or 4,71,70,970 shares in the company as of December 31.

This translates their total investment at over Rs 7,100 crore at the current market price of Rs 1,521.50. Jhunjhunwala’s other major investments are in stocks like Tata Motors (Rs 1,313 crore) and Escorts (Rs 917 crore).

Brokerage Motilal Oswal Financial Services retained ‘Buy’ on Titan Company with a price target of Rs 1,800.

“The management commentary continues to remain strong on near as well as longer-term growth prospects in the Jewellery business. The recovery in watches and eyewear businesses is also encouraging. There is a strong growth runway given Titan’s market share of less than 10% in the Jewellery industry and the continuing struggles of unorganised and other organised peers.”

Total income of the company during the quarter stood at Rs 7,659 crore, up 16.93% as against Rs 6,550 crore in the year-ago period.

Going with market experts, shares of the company looks expensive after nearly 100% jump since March lows. Commenting on the valuation and the ongoing momentum, YES Securities said, “While the stock is quite expensive at 59x FY23E earnings, we believe the momentum can sustain in the near term with January seeing a further pick‐up in jewellery growth rate to 28% led by an increase in the number of buyers in addition to higher ticket size, indicating continued market share gains.”

It further added that expected margin improvement in watches and eyewear businesses in FY22 coupled with full recovery from Q4 onwards would also be taken positively.

Brokerages Sharekhan and Edelweiss Securities are also positive on Titan with a price target of Rs 1,710 and Rs 1,842, respectively.

“We continue to remain upbeat on Titan owing to Indian consumers’ strong appetite for gold, sharp recovery, a positive turnaround in the eyewear business, and the likelihood of secular growth ahead,” Edelweiss Securities said in a report.