Rakesh Jhunjhunwala | Titan Stock: Consistent compounder! Time to follow the Jhunjhunwala path after Titan’s solid Q2 update?

Following the quarterly update, Titan rallied up to 5.8% to hit day’s high at Rs 2,744.30.

Global brokerage JPMorgan, which has maintained its overweight stance on Titan with a target price of Rs 2,800, said the company showcased a good revenue performance with the jewellery segment leading from the front.

During the September quarter, Titan added 105 stores to its retail network. “The outlook for the festive season (from Navratri in end September 2022) continues to be optimistic and is visible in positive consumer sentiment across categories,” the company said in an exchange filing yesterday.

Domestic brokerage

said the structural investment case for Titan is intact with a target price of Rs 2,970.

“Earnings growth visibility for Titan remains strong. It has compounded earnings by ~20% for an elongated period of time. In the jewellery industry, which is organising at a rapid pace, it is clearly at the vanguard in terms of growth among organised players. Its runway for growth is long, with a market share of ~6%. Unlike other high-growth categories, the competitive intensity from organised and unorganised peers in jewelry is considerably weaker,” the brokerage said.

Kotak Institutional Equities, which has an add rating on the stock with a target price of Rs 2,800, said Titan’s long term attractiveness comes from low market share (6-7%) in a large addressable market and wide gap versus competition and focus on keeping its lead

The brokerage expects some upside risk to its Q2 jewellery EBIT margin estimate of 12.6%.

In the Q2 update, Titan said its jewellery division grew 18% YoY on a high base of Q2 that had elements of pent-up demand and spillover purchases of a Covid disrupted Q1 FY22. Gold jewellery (plain) clocked low double digit growth whereas studded sales were higher than the overall division driven by good activations and better contribution from high value purchases.

The watches and wearables division grew 20% YoY, clocking its highest quarterly revenue while the eyecare division also saw healthy double-digit growth YoY.

The Jhunjhunwala stock is also a favourite of many long term investors like Saurabh Mukherjea. In the last 5 years, the consistent compounder has delivered a return of around 335%.

Trendlyne data shows that out of 30 analysts with coverage on the stock, only one of them have a sell rating with a majority of 16 calling it a strong buy.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)