Rakesh Jhunjhunwala cuts stake in Titan Company; here’s what you should do now

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Ace equity investor Rakesh Jhunjhunwala sold some of his shares in Titan Company during the June quarter of the fiscal 2022 (Q1FY22). At the end of the quarter, Jhunjhunwala held 3,30,10,395 shares, or 3.72% stake in the company, data available on BSE showed on Tuesday.

This was lower by 22.50 lakh shares from 3,52,60,395 shares held by Jhunjhunwala at the end of the preceding quarter ended March 31. On the other hand, the stake of his wife Rekha Jhunjhunwala stood the same at 96,40,575 shares or 1.09%. Jhunjhuwala and his wife now collectively hold a 4.81% stake in Titan against 5.06% in the preceding quarter.

Shares of the company traded 0.57% lower at Rs 1701.30 at around 9.30 am (IST). On the other hand, the benchmark BSE Sensex traded 0.20% higher at 53,007 at around the same time.

In his interaction with AIMA in April, Jhunjhunwala said that he is extremely bullish this time and believes battered stocks may deliver a good return. “There will be a big upturn in the Indian economy. Cyclical stocks and the most battered smallcaps and midcaps will outpace blue chips like HDFC and Titan over the next 4-5 years,” he added.

Other latest updates

Of late, Titan reported over two-fold growth in sales in the April-June quarter of this fiscal, aided by the low base of last year due to the nationwide lockdown at the onset of the Covid-19 pandemic.

Segments like jewellery reported almost 107% growth “primarily due to zero sales in April of last year”, Titan said in its quarterly updates for Q1FY22.

“The Company recorded revenue growth of 117% (excluding bullion sales) in Q1’22, with revenue contribution of approx 50%, 10% and 40% coming from April, May and June months respectively,” it said.

Should you buy or sell?

Emkay Global Financial Services is positive on Titan Company with a price target of Rs 1,810. “We expect recovery to be faster versus FY21 – 90% stores have already re-opened and footfalls are higher than last year. The second Covid wave impact and the phased implementation of Hallmarking are likely to further strengthen Titan’s franchise against peers and accelerate its growth ahead. After the recent run-up, valuations at 54x FY23E EPS may offer limited upside in the immediate term. However, given upsides to earnings from a full recovery we maintain a positive stance and a Buy rating,” Emkay said in a report on July 7.