This Rakesh Jhunjhunwala stock's Q3 result revealed; More money to be made, Sharekhan maintains Buy rating, price target Rs 1710

Rakesh Jhunjhunwala stocks performance: As per the latest corporate shareholdings filed on BSE, Rakesh Jhunjhunwala publicly holds 39 stocks with a net worth of over Rs 17200 Cr. He holds 5.32% stake in Titan (4.7 cr shares) worth Rs 7370 cr.

Rahul Kamdar | Feb 11, 2021, 12:16 PM IST

Rakesh Jhunjhunwala stocks performance: As per the latest corporate shareholdings filed on BSE, Rakesh Jhunjhunwala publicly holds 39 stocks with a net worth of over Rs 17200 Cr. He holds 5.32% stake in Titan (4.7 cr shares) worth Rs 7370 cr.

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Titan constitutes 42% of Big Bull’s Portfolio. Share price of Titan closed at Rs 1563 yesterday. The market cap of Titan is close to 1.4 lk cr. Titan stock is in the news because it has just revealed its Q3 result.

1/5

Titan retained its strong festive momentum with jewellery business registering 16% growth in Q3 FY21

Titan retained its strong festive momentum with jewellery business registering 16% growth in Q3 FY21

Titan Q3:

Titan’s Q3 FY21 consolidated operating performance was largely in line with expectations, as revenue grew by 17% yoy to Rs 7619 cr (in-line with expectation of Rs 7731 cr) and OPM stood at 11.1%. Titan Revenue growth excluding bullion sales stood at 12%. Titan retained its strong festive momentum with jewellery business registering 16% growth in Q3 FY21. The highlight of the quarter for Titan was a good recovery witnessed in store walk-ins and pick up in sales in metros and top cities.

 

2/5

Titan retail jewellery sales growth stood at 13% in Q3 which was driven by higher ticket sales

Titan retail jewellery sales growth stood at 13% in Q3 which was driven by higher ticket sales


Titan retail jewellery sales growth:

Titan retail jewellery sales growth stood at 13% in Q3 which was driven by higher ticket sales (jewellery purchases worth Rs. 1-2 lakh), while footfalls recovered to almost 97% of precovid levels. Wedding jewellery sales growth stood at 10% in Q3 (16% in January 2021). Bullion sales stood at Rs 340 cr while the share of gold coins remained higher.
 

3/5

Businesses such as watches and eyewear of Titan recovered to 88% and 92%

Businesses such as watches and eyewear of Titan recovered to 88% and 92%

Titan watches and eyewear businesses:

On the other hand, businesses such as watches and eyewear of Titan recovered to 88% and 92%, respectively better than the management’s earlier guidance (and versus a 55% and 61% recovery achieved in Q2FY2021). Titan’s Consolidated PAT growth stood at 7.5% yoy to Rs 530 cr. Higher demand for wedding jewellery due to a delayed wedding season, market share from small jewellers and adding more stores in the tier-2 and tier-3 towns would help the jewellery business maintain double digit growth momentum.

4/5

Titan has restructured the eyewear business model by closing down unprofitable stores

Titan has restructured the eyewear business model by closing down unprofitable stores

Titan Restructuring:

Titan has restructured the eyewear business model by closing down unprofitable stores and introducing ‘Eco Lite’ stores requiring lower investment. This will continue to help in improvement of the business’ long-term profitability. Improving volumes in the jewellery business, recovery in the watches business and shutting down of non-profitable eyewear stores would help the OPM to recover to double digits in FY22.

5/5

Jewellery retail sales growth stood at 13%; improved significantly to 28% in January 2021

Jewellery retail sales growth stood at 13%; improved significantly to 28% in January 2021


Titan Key positives:

Jewellery retail sales growth stood at 13%; improved significantly to 28% in January 2021 (footfalls growth was 13%)
Share of studded jewellery in jewellery business recovered to 26% in Q3 (grew by 9% yoy) from 18% in Q1
studded jewellery sales growth stood at 16% in January 21 (contribution of 39%)
Strong cost focus resulted in an EBIT margin of 10.3% for watches business while better products and lower discounts led to an EBIT margin of 18.1% for Eyewear business
Cash flow hedging losses has reduced significantly to Rs. 51 crore in Q3 from Rs. 484 crore in Q2

Titan Key negatives:

Gross margins decreased by 295 bps due unfavourable mix in the jewellery business
TEAL (subsidiary of Titan) revenues decreased by 31% as Aerospace business continue to face headwinds due to the grounding of flights

Titan Key Risks:

Any disruption in the recovery of jewellery business due to spike in the COVID-19 cases in various states would act as a key risk to earnings estimates.