Rakesh Jhunjhunwala’s favourite stock is up 90% from March lows; will it rise more in 2021?

Titan Company Limited’s share price has nearly doubled from its March lows during the current bull run. Currently trading at Rs 1,522 per share, the stock has zoomed from as low as Rs 720 apiece in March this year. Titan Managing Director C K Venkataraman, in a recent discussion with brokerage and research firm Motilal Oswal, said that the outlook for the firm is getting even better after Titan reported a 15% on-year growth in the festive season. In the longer run, Titan has eyes set on gaining market share post the coronavirus led disruption.

Eyes set on gaining market share

The pandemic created operational complexities on the balance sheet for unorganized and other organized players, this has strengthened the case for Titan gaining market share which currently sits at 10% of the Indian jewellery market. The company could be seeing an increase in its foothold across the country with inquiries for new franchises being strong in the current year. Similar to other listed and unlisted firms of India Inc, Titan too commenced cost saving measures. The management believes some of these savings are sustainable. Savings have been seen in all areas, from sales-related savings to material costs. 

Overall, there is still room for improvement for Titan in terms of consumer demand recovery. Although Titan Company has increased its market share, the management believes there is room for improvement. “Titan wants to make the international business more meaningful over the next five years, with contribution targeted at the mid-single digits as a proportion of sales,” the report noted.

Analysts bullish

“Titan’s medium-to long-term earnings growth opportunity is best-of-breed, reflected in the ~24% EPS CAGR over the past three years,” the brokerage firm said. It believes that the firm has a  strong runway for growth given its market share of less than 10% and the continuing struggles of unorganized and other organized peers. With a target price of Rs 1,650, Motilal Oswal has a ‘Buy’ rating on the scrip. The recent announcement by Titan of scaling down operations of Favre Leuba substantially is also being seen as a positive move. Brokerage firm Emkay Global said the move would result in trimming losses.

Big Bulls massive profits

Titan is often touted as the Big Bull Rakesh Jhunjhunwala’s favourite stock. Along with his wife, Rekha Jhunjhunwala, the big bull owns over 4.9 crore equity shares of the firm translating to a 5.5% stake in the Tata group firm. Although the billionaire investor has trimmed his stake in the firm this year, he still has managed to make a profit of approximately Rs 605 crore from Titan in 2020.