How Titan enriched Rakesh Jhunjhunwala
Nov 23, 2018 | 12:42 PM IST
Nov 23, 2018 | 12:42 PM IST
Titan stock rate was taking quite some blows from traders today, a lot so that it tumbled by almost 2%, before finishing at Rs 914.65 per piece on BSE down by Rs 13.25 or 1.43%. however, here is why investors should not give this news plenty weight. Warren Buffett once said that he would rather invest in a extremely good organisation at a fair price than in a fair company at wonderful price. simply put, the domination of Titan over the Indian jewelry market makes it a one of its kind company. hence, when a company with good business model crashes then for investors it is generally an opportunity to make an investment. when it comes to Titan, the large bull of Dalal street has in no way allow the inventory out of his sight - perhaps, that is one enterprise in Jhunjhunwala's portfolio that has made him rich like no other.
While today was a bad day for Titan, that doesn't mean the company isn't set for achieving further greatness. The company is set to add more to Jhunjhunwala's pocket. even though Jhunjhunwala has mentioned in an interview that he does not wish to earn any money in 2019, it still does not mean that Titan will play along and now not offer returns to the ace investor!
To begin with, why Titan is an amazing stock? The company was at an all-time high of Rs 731.70 per piece on October 09, 2018. The decline was mainly due to every stock crumbling because the benchmark indices were facing heavy selling pressure. From second half of September month, till first two weeks of October 2018, the Indian markets saw the bear roaring.
In case you had read between the lines of a stock's overall performance, then simply, you too would have considered the crash as a buying opportunity.
Even if you look at today's performance Titan touched an intraday high of Rs 933.55 per piece. At that level the stock makes an overall return of 27.85% to investors. The returns will not end here, that's for sure going forwarrd.
TrendLyne.com, which tracks Jhunjhunwala portfolio's performance, reveals that the ace investor gained almost 20% from Titan in just one month's time.
Also, Jhunjhunwala's portfolio has also seen gains from other stocks as well. To be specific, his portfolio has gained almost 71% in one month's time.
Jhunjhunwala faith and trust in the company is a lot that, when the whole thing changed into crashing in September, he made an investment in Titan.
TrendLyne.com data shows, between July to September 2018, Jhunjhunwala improved his holding in Titan via another 0.06% with 63,251,220 equity shares worth Rs 5,860.5 crore. until the previous day, the data revealed that Titan gave returns of approximately 16.74% in which his whole holding on this company was worth Rs 5,790.3 crore. monitoring the every day overall performance of Titan, Jhunjhunwala's holding price has risen.
It needs to be stated that, Jhunjhunwala had made a maximum cut in Titan among April - June 2018 quarter, as it turned into believed that a large Rs 1,135.61 crore from this company and now has about Rs 5,766.84 crore in June 2018 compared to March 2018 where the holding stood at Rs 6,902.45 crore.
Well bouncing back for Titan means definitely Jhunjhunwala sees the bigger picture of this enterprise.
In a 12 monthss time, Titan has more than doubled on BSE. Titan has touched a low of Rs 522 per piece on July 27, 2017, and for the reason that then has won by means of 92.72% on BSE by touching a excessive of Rs 1,006 in keeping with piece. The cutting-edge fee of Titan indicates that the agency is seeing correction but does not imply the capacity is misplaced.
Not best this, Titan has shown a few greater than promising growth. Titan has a lowest market price of Rs 1.37 within the month of October 2001, since then the company has grown via a behemoth 73330.65% or 734.30 times currently in a span of 18 years.
Post Q2FY19, analysts at Jefferies stated, "TTAN reported strong sales growth of 26.4% yoy (~10% ahead of our est) driven by broad-based growth (28.5% in Jewellery, 17.3% in watches). EBITDA margins were down 210 bps yoy to 10.6% impacted by high base and few one-off costs. Management sounded confident of Q3 given strong festive demand and wedding segment pick. While recent correction has improved risk-reward,valuation still keeps us on the sidelines. Maintain Hold, PT Rs 920."
Alternatively, Krishnan Sambamoorthy and Vishal Punmiya, research Analysts at Motilal said, We believe that premium valuations are fully deserved for a business that has perhaps the best revenue growth potential in the large-cap FMCG/retail space (20% CAGR growth in Jewelry its largest segment in the next five years)."
Abneesh Roy and Alok Shah analysts at Edelweiss Financial Services said, We envisage Titan to extend its growth run led by market share gains, rising share of studded jewellery, new launches and retail expansion. Margin expansion levers such as higher share of studded (jewellery), in-house frame manufacturing (eyewear), cost optimisation and operating leverage are in place.
Following which, analysts at Edelweiss added, At 50x FY20E EPS, we arrive at TP of Rs 990. We maintain BUY/SO. At CMP, the stock is trading at 42.9x FY20E EPS.
Earlier, ICICI Securities on Titan stated, "We believe Titans growth story will remain multi-pronged and drawn over a longer time frame. Consequently, we shift to a DCF based valuation to arrive at a target price of Rs 1090 with a BUY recommendation on the stock. On a DCF basis, we assume revenue CAGR of 20% over FY17-23E and 11% over FY24E-30E with 10.8% WACC and 4% terminal growth rate."
Even HDFC Securities previously stated that, Titans valuation is seen upto $11,711 million (which is approx Rs 8,02,164.85 crore) ahead. Not only this, Titan is the only domestic company which will take on global players like Tiffany, LUK Fook, Signet Jewellers and Chow Tai Fook Jeweller.
Hence, if you want to earn and become a crorepati like Jhunjhunwala, then you must have a look at Titan. Grab it at its massive lows, and make a fair trading. Be patient, Be wise, Let Titan do the walking!
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