Jhunjhunwala who is often referred to as the ‘Warren Buffet of India’ has been with Titan Shares since 2015. He has since changed his stake in Titan on several occasions. As on March 31, 2022, Rakesh holds 35,310,395 equity shares or 3.98% in Titan, while his wife Rekha Jhunjhunwala holds 9,540,575 equity shares or 1.07% in the company.
Rakesh manages his and his wife’s portfolio. Together, the couple holds 44,850,970 equity shares or 5.05%.
On Wednesday, shares of Titan corrected, tracking a broader bearish market tone, and remained on the downside. Shares closed on BSE 2110.80 each, down 2.57%.
Despite the drop in today’s market cap, Titan still delivered nearly double-digit returns to its investors in a year.
Shares of Titan have gained about 39 per cent in a year on Dalal Street. Titan shares were at this level on May 19 last year 1521.85 each.
As per Trendline data, till date, the total portfolio value of Jhunjhunwala is around Rs. 28,767.48 crores. of which, their holding value 9,599 crores in Titan alone – making it the most valuable stock in its portfolio.
Analysts expect Titan’s stock to come out ahead on the back of a strong balance sheet and strong market presence. Next to Titan, Jhunjhunwala will also add significant gains to his portfolio.
Despite disruptions in Q1 as well as Q4, Titan managed to deliver a solid all-around performance for FY22. The total income of the company for FY22 was 26,411 crore, registering a growth of 36% as compared to 19,426 crore in FY21 (excluding simple sales). Titan posted a profit 2,983 crore (before taxes and extraordinary items) for the financial year as against 1,370 crore in FY21, an increase of 118%.
For Q4 FY22, Titan said Q4 FY22 ended with a satisfactory performance despite partial lockdown, volatility in gold prices and uncertainty in the delicate geopolitical situation.
Why Titan is a Hot Pick
Titan has been an exceptional performer in the discretionary sector, with the stock price growing at a CAGR of ~36 per cent over the past five years, said ICICI Direct’s Bharat and Cherag Sidhwa Research Analysts in their note.
At the analyst meet, analysts at ICICI Direct said Titan’s management listed growth pillars for its core business (Jewellery & Watches) and emerging concepts (ethnic, wearables and international business). Jewelery revenue is expected to grow 2.5 times (implied CAGR: 20%) by FY27. Huge headroom for growth with current market share of less than 6% 4 lakh crore market.
In addition, management has targeted higher growth for the wearables category (~6x), with ambitions to grow the watches division to 10,000 crore in FY26 with 18% EBIT margin. Also, he believes that the new initiative to achieve substantial income by FY27 ( 1000+ crores).
In Q4FY22, the company’s jewelery business registered a revenue of 6,132 crore as compared to 6,397 crore in Q4 FY21 (excluding simple sales), a decline of 4%. Watches and Wearables Business Reported Income 622 crores with a growth of 12% over Q4 FY22 555 crore in Q4 FY21. EyeCare Business Reported Income 6% growth in Q4 FY2012 as compared to 134 crores 127 crore in Q4 FY21. Other businesses involved
Income from Indian dress wear and fragrances and fashion goods reported income 42 crore in Q4 FY22 as against 35 crores in Q4 FY21, a growth of 20%.
On the future outlook, CK Venkataraman, Managing Director, Titan, in the financial audit report had said, “The company is well prepared and looks forward to an exciting Q1 with all its stores gearing up for a much awaited Akshaya Tritiya celebration this year. With the international expansion into GCC markets and the first Tanishq store coming to the US, we are gearing up to touch new horizons in FY13.”
“We remain structurally positive on the stock as the high growth visibility justifies the premium valuation and maintain buying on the stock,” the duo said.
Analysts highlight four triggers for future price performance at Titan. This:
1. Strong balance sheet and asset-light distribution model has enabled it to beat peers in terms of store additions (to add 40+ Tanishq stores and 100+ watch stores in FY23).
2. Tanishq’s penetration into the Indian jewelery market is still at a very early stage (<6% market share). This provides Titan a huge opportunity to increase its market share. Mandatory gold hallmarking will lead to an increase in the market share from the unorganized sector.
3. The wedding space is thriving and wedding jewelery is becoming a significant growth driver, while its share of total jewelery revenue has grown significantly.
4. Analysts at ICICI Direct report Revenue, Earnings to grow at a CAGR of 20%, 30% respectively in FY 2012-24E.
Thus, the analysts mentioned above use . set a buy recommendation with a target price of 2725 i.e. 66x FY24E EPS.