Rakesh Jhunjhunwala Portfolio: Ace investor Rakesh Jhunjhunwala‘s favourite portfolio stock, Titan, is down more than 15 per cent this year (CY 2022) so far amid a highly volatile market. Titan shares have even underperformed benchmark NSE Nifty 50 which has tumbled over 7 per cent so far this year.
Jhunjhunwala who is often referred to as the ‘Warren Buffet of India’ have stayed with Titan shares since 2015. Data available with BSE showed that Rakesh Jhunjhunwala together with his wife held over a 5 per cent stake in the company as of March 31, 2022. On the other hand, the country’s biggest institutional investor Life Insurance Corporation of India has a 3.15 per cent stake in Titan.
According to market watchers, sustained outflows by foreign institutional investors, geopolitical tensions and rising inflation concerns weighed market sentiment. Meanwhile, the company in May reported a 7.21 per cent fall in consolidated net profit at Rs 527 crore in the fourth quarter ended March 2022. It had posted a net profit of Rs 568 crore in the January-March quarter of FY21.
Its total income was up 4.25 per cent to Rs 7,872 crore during the period under review as against Rs 7,551 crore in the corresponding quarter last year. Titan’s revenue from sales of products or services was down 1.14 per cent to Rs 7,267 crore in the fourth quarter of FY22 as against Rs 7,351 crore a year ago.
Titan Stock: What Should Investors Do?
However, analysts are optimistic about Titan’s stock ahead due to its robust balance sheet and strong market presence.
ICICI Securities in a report said, “Revenue momentum for Titan’s jewellery division decelerated in Q4FY22 owing to Covid led disruptions and a sharp rise in gold prices in March leading to deferment of purchase by customers. Despite the same, the company outperformed other jewellery players and continued to gain market share. The management indicated that demand trends in April have been encouraging and are in line with the company’s targets.”
Axis Capital last month upgraded the stock to ‘Reduce’ from a ‘Sell’ rating with a target price of Rs 2,050. The brokerage said that the recent correction has reduced Titan’s premium to its historical P/E band,” it said.
Santosh Meena, Head of Research, Swastika Investmart Ltd. said, “Titan is trying to create a base around the 2,050 level after a healthy correction, however, 2,300-2,350 is a critical resistance area as a cluster of key moving averages. Therefore, 2,050-2,350 is a well-defined trading band and if it manages to take out the 2,350 level, we can expect fresh bullish momentum while if it slips below the 2,050 level, then 1,900 will be the next sacrosanct support level. Existing investors should hold this stock as the long-term structure is still bullish whereas one can start to accumulate from current levels.”
Titan Company shares remain Motilal Oswal’s top pick in the large-cap consumption space in India, with strong earnings growth visibility and compounding ~20 per cent for an elongated period of time. “In the Jewellery industry, which is organising at a rapid pace, Titan is clearly at the vanguard among organised players in leading this growth. Its runway for growth is long, with a market share of just 6 per cent,” the brokerage said in its report last month. It maintained a ‘buy’ rating on the stock with a target price of Rs 2,900, implying 39 per cent upside.
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