Rakesh Jhunjhunwala’s favorite stock at new all-time high; Titan stock nearly doubles in less than one year

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June 23, 2021 11:17 AM

Titan Company share price gained as much as 1.5 per cent to Rs 1,784.25 apiece, also a fresh record high in intraday on BSE

Rakesh Jhunjhunwala, TitanThe big bull had questioned why Cement stocks are valued at 30-40 times earnings, while steel stocks are valued at 5-7 times earnings.

Titan Company share price gained as much as 1.5 per cent to Rs 1,784.25 apiece, also a fresh record high in intraday on BSE. Rakesh Jhunjhunwala’s favorite stock surpassed the previous high of Rs 1,770.35 apiece, touched yesterday. With ease in lockdown in several states, improving vaccination rate and expectedly better growth in the jewelry segment in the coming 2-3 years has fueled Titan to an all-time high, analysts said. In less than a span of one year, Titan stock has zoomed 91 per cent from its 52-week low of Rs 935.20. While it has soared 12 per cent so far this month. Besides, the government has also made the hallmarking of gold jewellery mandatory from June 15, 2021, under which jewellers will be able to sell hallmark certified 14 or 18 or 22 carats of gold jewellery.

The share prices of Titan have been rallying since the beginning of June after the stock gave a decisive breakout above its resistance level. The stock gained focus after the government granted relief to jewellers in wake of the Covid-19 resurge and extended the deadline for hallmarking gold jewellery to June 15, 2021. “With expectations of stronger recovery on the back of pent up demand the outlook for this stock appears to be optimistic,” Likhita Chepa, Senior Research Analyst, CapitalVia Global Research, told Financial Express Online. She also said that the company’s ongoing initiatives to contain cost and improve market share are expected to result in better margins and support healthy performance in the future,

In traded volume terms, 2.70 lakh Titan shares have traded on BSE, while a total of 8.21 lakh shares have exchanged hands on NSE, so far in the trade. Analysts at Edelweiss have given a ‘buy’ rating to the stock, with a target price of Rs 1,890, implying an upside of nearly 6 per cent from current levels. The research firm continues to remain positive on Titan for the long term owing to strong brand portfolio across segments; steady store expansion with focus on expansion in tierII/III markets; and the demand tailwind from a structural shift towards organised retail.

Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala, collectively held 4.49 crore shares in Titan Company at the end of the March 2021 quarter. “The stock has scaled an all-time high after a breakout from his multiple highs of 1620 levels. Partial unlocking in various states has also improved sentiments for the retail sector. We expect the stock to move higher for a target of 1,800 over the next few weeks,” Vikas Jain, Senior Research Analyst at Reliance Securities, told Financial Express Online.

Technically, investors should book some profits now as the stock has entered the overbought zone, said AR Ramachandran, Co-founder & Trainer, Tips2Trades. “1620-1660 levels should be a good support zone where new investors can re-enter,” he told Financial Express Online. HSBC Securities, last month in a note, said that the mandatory hallmarking will shape the pricing behaviour of trade, trigger consolidation and reduce the artificial gap in pricing between jewellers, making the value proposition of organised jewellers such as Titan more appealing. “Market share gain journey for Titan will accelerate: Titan’s key structural appeal is the consistent market share gain opportunity from the unorganised trade (still nearly 70% of the market),” it added.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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