This stock made Rakesh Jhunjhunwala richer by 16% in 1 month; here’s why you should buy it

A jewelry stock is all what Rakesh Jhunjhunwala needs to become rich! Yes it's quite true. His favorite stock Titan is making money for him. Titan has become a hot stock, and not only this, the company has already achieved a new high in 2019, hinting towards more greater days ahead. Jhunjhunwala is already making money in Titan. For instance, a TrendLyne.com data which tracks Jhunjhunwala’s portfolio had posted the ace investors wealth in Titan at Rs 6,444.2 crore on Tuesday, to your surprise now his money in this jewelry stock has risen to Rs 6,721 crore in just one day. You can also buy, Titan for yourself because the new high mark is just the beginning, this company will make you richer in near term and crorepati like Jhunjhunwala.

On Wednesday, investors were cautiously trading in Titan, the company after earmarking an intraday high of Rs 1,071 per piece on BSE finished at Rs 1,059.10 per piece down by 0.71%. 

In previous trading session, Titan clocked an all-time high of Rs 1,074 per piece on BSE, which resulted in a jump of nearly 47% in less than five months. The company witnessed an all-time low of Rs 731.70 per piece in October last year. 

So far in 2019, Titan has made Jhunjhunwala richer 16%. The stock was trading near Rs 927-level on January 01, 2019, since then it has surged by 15.78% if we take into consideration the new high. 

Interestingly, Jhunjhunwala during December 2018 (Q3FY19) quarter removed some money from Titan, bringing down his portfolio by 0.04%. However, this did not stop Titan in making history for Jhunjhunwala. Now he has 7.08% with 62,901,220 equity shares which are currently worth Rs 6,721 crore. 

Majority of experts have given a buy call on Titan, which means it will only be a matter of time for Jhunjhunwala to see his wealth rise to Rs 7,000 crore in this company ahead. If you want to be among the gainers list like Jhunjhunwala, then this why you should prefer Titan as a stock for investment.

On Titan, Manoj Menon and Vismaya Agarwal analysts at ICICI Securities said, “We raise our earnings estimates slightly building strongerthan-expected margin expansion; modelling revenue / EBITDA / PAT CAGR of 20% / 27% / 24% over FY19-21E. We maintain BUY with DCF-based revised target price of Rs1,150 (earlier Rs1,100). At our target price, the stock will trade at 49x P/E multiple Sep-20E.”

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While Pratim Roy, analysts at Stewart Mackertich said, “We expect the company to achieve 22% CAGR in jewellery business over the next three years led by gold exchange, increasing contribution from wedding collection and the margin support through operating leverage. Their eyewear, fragrance, & saree business also looks promising in near term. Factoring the above rationale we are assigning a P/E of 49x on the FY21 revised EPS to upgrade our price target from INR1065 to INR1140.”

Alok Shah and Abneesh Roy, analysts at Edelweiss Securities 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. Rolling forward (June 2020), we assign 55x PE multiple (earlier 50x) to arrive at revised TP of INR1,182 (earlier, INR990). We maintain ‘BUY/SO’. At CMP, the stock is trading at 48.9x FY20E EPS.”

Richard Liu, Vicky Punjabi and Nikita Maheshwari analysts at JM Financial said, “ We expect the stock to stay strong on the back of this result; confidence remains high as far as the Jewellery segment goes (targeting to be 2.5x over FY18-23E) and even Watches’ trajectory have now stabilised at a higher level. We maintain BUY with a revised target-price of INR1,155 (45x Mar’21 EPS).”

Ashit Desai and Preethkar R analysts at Emkay said, “Profitability across the divisions was mixed with margins in watches being impacted by high ad spends. Management continues to maintain a 15% EBIT margin target for the division. Jewelry margin expansion was impressive, but was partly supported by inventory gain and lower ad spends. The focus remains on growth, and share gains can drive further margin expansion through operating leverage.”

Therefore, analysts at Emkay added, “Given the 20%+ earnings CAGR, valuations of 48x FY20E EPS are attractive relative to peers. We remain positive and maintain our Accumulate rating, with a revised TP of Rs1,080, valuing it at 45x Dec-20E EPS.”

Hence, a long list of reasons are available for investing in Titan.