NEW DELHI: A sudden rise in gold prices could hit over 50 per cent of ace investor Rakesh Jhunjhunwala’s portfolio.
His single-largest investment — Titan Company reported a 2 per cent decline in revenue in its jewellery segment for the quarter ended September 30, hurting the stock’s prospects and, hence, over 50 per cent of his known stock portfolio of Rs 13,000 crore.
Jhunjhunwala and his better half Rekha own 7.05 per cent stake in Titan that was worth Rs 7,500 crore on Wednesday morning when the scrip tanked 4.73 per cent to hit a low of Rs 1,199.80.
Goldman Sachs, which has a neutral rating on the stock, has a target of Rs 1,108.
At 48 times FY21 EPS, the scrip is pricing in a recovery in jewellery sales, it said, while lowering its FY20-22 estimates by roughly 1 per cent to reflect lower sales.
Another foreign brokerage Macquarie has a target of Rs 1,078, as it noted that September is generally a moderate quarter for jewellery business. The targets by the two foreign brokerages suggest up to a 10 per cent downside potential.
The scrip delivered a whopping 103.86 per cent return in the past two years which is 5 times Sensex’s 17 per cent return.
Rakesh Jhunjhunwala’s equity portfolioBig Bull’s top stocks 7 Oct, 2019Starting with just Rs 5,000 in his pocket in 1985, Rakesh Jhunjhunwala has scripted one of the biggest success stories on Dalal Street. According to Bloomberg Billionaire Index, Big Bull’s net worth stood at over $2.5 billion (Rs 17,500 crore) at the end of August, 2019.
Often referred to as India’s own Warren Buffett, the Big Bull owns more than 1 per cent in over 30 stocks, valued at over Rs 13,000 crore.
Let’s take a look at the top 10 stocks of the ace investor: Titan7 Oct, 2019Jhunjhunwala held 7.05 per cent stake worth Rs 7,837 crore in Titan as of June end, 2019. The company’s stock is up 34.41 per cent year to date. The billionaire investor has been hit due to an industry-wide slowdown on account of financing issues and delayed payments for ongoing infrastructure projects. Lupin7 Oct, 2019The drugmaker is another company where Jhunjhunwala has over 1 per cent stake (1.71%) as per June quarter shareholding data. The stock has slipped over 20.08 per cent year-to-date. The total holding value in Lupin is over Rs 520 crore. Crisil7 Oct, 2019Jhunjhunwala’s other significant stock is Crisil with 5.49 per cent stake worth Rs 516 crore. The stock of the rating agency is down over 19.7 per cent this year.
Federal Bank7 Oct, 2019Big Bull holds 2.93 per cent stake worth Rs 492 crore in the Kochi-headquartered lender. Federal Bank had reported 46 per cent jump in June quarter. However, shares of the private lender are down 9.5 per cent in 2019.
“We reduce our total revenue estimate by 1.7 per cent YoY for FY20 and cut Ebitda margin estimate by 22 bpsto 11.1 per cent. The asking revenue growth rate for H2FY20 stands at 18.8 per cent YoY, which still seems achievable. We maintain our hold recommendation on the stock with a revised target of Rs 1,145 from Rs 1,110 earlier, valuing it at 48 times, Reliance Securities said.
Dolat Capital expects Titan to report flattish revenue growth in September quarter. “Nevertheless, we continue to believe that the long term fundamentals are intact and in the absence of higher investment opportunities in the sector, Titan would continue to command high valuations,” it said.
While retail sales declined in July, between August and September the retail growth was 15 per cent on YoY basis, possibly due to an enhanced level of promotions and schemes, the Tata group company told BSE.
Retail sales or secondary sales rose 7 per cent in Q2 but revenues as per financials declined 2 per cent YoY due to adverse impact of the hedges matured during the quarter, the company said.
“Titan has made disclosures time and again. They have been very transparent. The market actually understands that these are things, which are probably seasonal. It will going to be tided over. What one values is the franchise and sustainable ROEs that it can report, which I think is pretty good,” said Sameer Narayan, market expert.
During the quarter, the company’s Tanishq division added a net of 21 stores in Q2, and 33 in total for the first six months of the ongoing financial year.
Motilal Oswal Securities said that Titan is a business that has best top-line growth visibility in the largecap retail space, prospects of a continued Ebitda margin improvement because of high same-store sale growth contribution and the likelihood of delivering a sustained RoCE improvement from 26 per cent in FY19 to 35 per cent.
“The valuation premium is fully justified, in our view. In fact, increasing concerns about revenue and earnings growth for many consumer peers will also likely ensure high multiples for Titan. We maintain ‘Buy’ with a revised target price of Rs 1,435,” it said.