Rakesh Jhunjhunwala’s favourite stock may gain upto 25%; global brokerages bullish after Q2 results

Rakesh Jhunjhunwala’s favourite stock, Titan Company Ltd, has gained nearly 13% in the last one month on the back of strong quarterly earnings. Titan reported a 222% rise in net profit on-year basis while revenue grew 66%. Analysts at global brokerage firms have reiterated their positive views on the stock expecting as much as 25% upside from current levels. The big bull Rakesh Jhunjhunwala has been a shareholder of Titan for over a decade and his stake in the company is the largest among his portfolio. Rakesh Jhunjhunwala recently increased his shareholding in the company, for the first time since December 2019. 

Macquarie Research – Outperform
Target price – Rs 3,000

Titan’s second quarterly results surprised the brokerage firm as cost control and better product mix drove stronger than expected 13% jewellery margin. “We see tailwinds in Titan sales growth momentum as its investments in store additions, product design, marketing etc. allow it to grow ahead of the industry,” analysts at Macquarie said in a note. They added that building blocks are in place through hallmarking norms to drive higher transparency/ compliance in the medium term. The brokerage firm has raised FY22E EPS by 13% to factor in second quarter results that and continued strength in jewellery, watch and eyewear margins. The target price implies nearly 25% upside from current levels. 

Morgan Stanley – Outperform
Target price- Rs 2,501

The stellar second quarter performance was better than estimates pinned by Morgan Stanely analysts. The brokerage firm said that the result was 15% ahead of their estimates. The brokerage firm highlighted management’s optimistic outlook for the company. “Management remains confident about the upcoming festive season. It will continue to invest in growth in all business segments given the market share opportunity,” said Morgan Stanley. Increase in Covid-19 cases and a delay in urban consumption recovery are seen as some threats to the upside.

Haitong – Outperform
Target price – Rs 2,720

Analysts at Haitong were impressed by the quarterly earnings of Titan, which was better than their estimates. “Jewellery, Eyewear and others segment are trending well above preCOVID levels while Watches reported strong sequential growth and is inching closer to pre-COVID levels,” the brokerage firm said. “We increase our EPS estimates for FY22-24 by 3.2-6.7% driven by strong revival in discretionary spends and robust store addition plans. We raise our TP from Rs 2,060 to Rs 2,720 as we roll over to our March 2024 EPS of Rs 40. Titan remains a top pick in the Consumer Discretionary segment for the Chinese brokerage firm. The target price implies nearly 13% upside.