Rakesh Jhunjhunwala, who is referred to as the "Warren Buffett of India", on Friday added some losses to his portfolio, especially from his most valued stock. The big bull's major holding in value terms is in Tata Group-backed Titan Company, which is a leader in the gems and jewelry segment. Titan shares were in deep red and Jhunjhunwala lost nearly 560 crore in a single day from the downside in the company.
Titan shares nosedived by more than 7% during the trading session, with an intraday low of 1,911 apiece on the BSE.
On the BSE, the shares tumbled by 124.80, or 6.06%, and settled at 1,935.35 apiece. At the closing price, Titan's market valuation stood at 1,71,817.69 crore.
On the previous day, Titan shares stood at 2,060.15 apiece on the same exchange.
Since Thursday's closing, Titan shares have dipped by 124.80 per piece.
As per the shareholding pattern of Titan, as of March 31, 2022, Rekha Jhunjhunwala holds 95,40,575 equity shares, or 1.07%. Meanwhile, Rakesh Jhunjhunwala's shareholding in Titan stands at 3,533,10,395 equity shares, or 3.98%.
Cumulatively, the couple holds 4,484,50,000 equity shares, or 5.05%.
Due to Titan's steep selloff, Jhunjhunwala lost at least 559.74 crore in a single day (124.80 X 4,48,50,970 equity shares).
As per Trendlyne data, Jhunjhunwala's cumulative portfolio in Titan is valued at 8,678.7 crore.
Rakesh manages his and wife's portfolio.
In the last three months, Titan shares have plunged by more than 28%. While so far in 2022, the shares have dropped over 23%. However, in a year, the shares have managed to gain more than 13%. On June 17 last year, Titan shares stood at ₹1,708.1 apiece on BSE.
Despite the latest downturn in Titan shares, experts are optimistic about the company going forward.
In their latest research note, analysts Manoj Menon, Aniket Sethi, and Karan Bhuwania at ICICI Securities have given a buy target on Titan. In their sector-based report dated June 11, the analysts said, "We believe mandatory hallmarking may create a level-playing field in the Indian jewellery market, driving further formalisation." They added, "Maintain BUY on both Titan and Kalyan."
For Titan, the trio said, "We have compared the unit economics (FY20) of Tanishq, Kalyan, Joyalukkas, and Senco (Table 1). "In terms of operating margins, Titan is ahead of other jewellery players (despite much lower unit sales than Joyalukkas)."
The analysts said that comparing the companies in the gems and jewellery segment, "Titan is ahead on return metrics (RoCE of 28%; this also includes other businesses)." Joyalukkas also has a good RoCE of 21% given the good revenue intensity (sales/sq. ft.). Senco’s RoCE print comes on the back of a good franchisee system in place. Kalyan has a weak return profile compared to other players. In terms of inventory days, Titan is the most efficient (131 days, including other businesses), followed by Joyalukkas (144 days), Senco (147 days) and Kalyan (167 days). "
Last month, Bharat Chhoda and Cheragh Sidhwa, Research Analysts at ICICI Direct, said, "Titan has been an exceptional performer in the discretionary space, with the stock price appreciating at 36% CAGR in the last five years," adding, "We continue to remain structurally positive on the stock as high growth visibility justifies premium valuations and maintain a BUY on the stock."
The duo at ICICI Direct has set a target price of 2,725 (i.e., 66x FY24E EPS) on Titan.
Also, Centrum has given a buy rating on Titan. Shirish Pardeshi, Research Analyst, Consumer at Centrum said, "e Titan’s strategy revolving around serving millennials, meeting their aspirational demand with the introduction of new designs and channels, could pay richly." Further industry formalization shows up in market share gains. We maintain a positive view and expect a faster recovery and margin gains. The turnaround of the Caratlane and eyewear divisions and their profitability potential are not yet priced in. Considering FY22, we cut FY23E/FY24E earnings by 15%/10.9% and retain BUY with a revised DCF-based TP of Rs2,817 (implying 69.5x FY24E EPS). Risks: irrational competition from regional players; prolonged recovery in the economy, leading to lower demand for jewelry; rising gold prices. "