Rakesh Jhunjhunwala’s Rs 7,000 crore bet can add glitter to your portfolio

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At the time when clouds of region-wise lockdowns are again getting darker due to rising coronavirus cases in the country, brokerages on Dalal Street believe that Titan’s omnichannel strategy across jewellery, watches and eyewear will neutralise impact to some extent. Thus, they have retained their bullish views on the company.

The company last week said it continued to witness strong business momentum as the impact of Covid-19 on consumer sentiments seemed to fade in the early part of the January-March quarter.

The company recorded strong revenue growth of 60% for the overall March quarter due to the low base of March 2020, with revenue growth of over 36% in the comparable January and February months.

Brokerage Prabhudas Lilladher upgraded the company to ‘Accumulate’ from ‘Hold’ with a price target of Rs 1,663. Shares of the company traded 1.52% higher at Rs 1531.40 at around 1 pm (IST). On the other hand, the benchmark BSE Sensex was up 0.36% at 48,056. Overall, the scrip has gained more than 85% from its 52-week low of Rs 809.85, scaled on May 18, 2020.

“We believe the spike in Covid-19 cases, region-wise lockdowns and restriction in operations are likely to impact near term sales. We believe segments like Taneira, Eyewear and entry into Over the Head headphones and Truly Wireless earphones will emerge as major growth drivers in coming years,” the brokerage said.

With a total value of over Rs 7,200 crore, ace investor Rakesh Jhunjhunwala together with his wife held more than 5% stake in the company as of December 31. The scrip has already delivered multibagger return to the big bull ever since he is holding the stock. Going with some media reports, Jhunjhunwala first bought 6 crore shares of Titan in 2002-2003 at a price of Rs 3.

Phillip Capital also believes that the latest lockdown imposed in Maharashtra will not have a material impact on business operations as only 15% of Tanishq stores are in Maharashtra. “Lockdown is imposed up to 30th April 202 and a major part of jewellery demand is nonperishable- which means, customers can defer purchases to later quarters. However, it could see some impact on wedding jewellery sales (20-25% of total jewellery sales) in Q1FY22, as customers have to make time-bound purchases ahead of events,” the brokerage said.

Phillip Capital has a ‘Buy’ call on Titan with a price target of Rs 1,820.

“Recent corrections in gold prices (down 20% from recent all-time highs) will make fence-sitters buy-as seen in the past. Jewellery volume had increased 67% in Q1FY14 when gold prices fell 15% yoy for a brief period. Market-share gains, franchisee-led store expansion, and shift from unorganised to organise continues,” the brokerage added.