Spike in gold prices weighs on 50% of Jhunjhunwala portfolio

Jhunjhunwala and his better half Rekha own 7.05 per cent stake in the company.

Reuters
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.
NEW DELHI: A sudden rise in gold prices may hit over 50 per cent of equity portfolio of ace investor Rakesh Jhunjhunwala.

His single-largest investment Titan Company reported a 2 per cent drop in revenue in its jewellery segment for September quarter, hurting the stock’s prospects and, thereby, over 50 per cent of the Big Bull’s known stock portfolio of Rs 13,000 crore.

Jhunjhunwala and his better half Rekha owned 7.05 per cent stake in Titan as of June end, which was worth Rs 7,500 crore at Wednesday’s price. The scrip tanked 4.73 per cent to hit a low of Rs 1,199.


Goldman Sachs, which has a neutral rating, has a price target of Rs 1,108 for the stock.

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 price target of Rs 1,078. It noted that September is generally a moderate quarter for the jewellery business. The targets by the two foreign brokerages suggest up to 10 per cent downside potential.
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The scrip delivered a whopping 103.86 per cent return in last two years, which was 5 times Sensex’s 17 per cent return.

Rakesh Jhunjhunwala's equity portfolio
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Starting 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:
Starting 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 ..
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Jhunjhunwala 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.
Jhunjhunwala 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 indust..
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The 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.
The 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 ..
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Jhunjhunwala’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.
Jhunjhunwala’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.
Big 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.
Big 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..
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The billionaire investor holds stake worth Rs 454.25 crore in the engineering company. Escorts had posted a fall in the June quarter profit. The stock has slipped over 16 per cent this year.
The billionaire investor holds stake worth Rs 454.25 crore in the engineering company. Escorts had posted a fall in the June quarter profit. The stock has slipped over 16 per cent this year.
The Big Bull holds 4.99 per cent stake worth Rs 322 crore in the manufacturer of luggage and travel accessories. The stock is down over 11.32 per cent year-to-date.
The Big Bull holds 4.99 per cent stake worth Rs 322 crore in the manufacturer of luggage and travel accessories. The stock is down over 11.32 per cent year-to-date.
Jhunjhunwala holds 7.38 per cent stake worth Rs 310 crore in India’s only listed company engaged in the casino gaming industry. The stock of the company has slipped over 39 per cent year-to-date.
Jhunjhunwala holds 7.38 per cent stake worth Rs 310 crore in India’s only listed company engaged in the casino gaming industry. The stock of the company has slipped over 39 per cent year-to-date.
Jhunjhunwala holds 9.86 per cent in the construction and engineering company worth Rs 293 crore. The firm had posted flat profit growth in the June quarter. The stock has plunged 44 per cent YTD.
Jhunjhunwala holds 9.86 per cent in the construction and engineering company worth Rs 293 crore. The firm had posted flat profit growth in the June quarter. The stock has plunged 44 per cent YTD.
Rallis India, a subsidiary of Tata Chemicals, is one of the leading crop care companies. Jhunjhunwala holds 9.25 per cent stake in the company worth Rs 293 crore. The stock has slipped over 9.79 per cent.
Rallis India, a subsidiary of Tata Chemicals, is one of the leading crop care companies. Jhunjhunwala holds 9.25 per cent stake in the company worth Rs 293 crore. The stock has slipped over 9.79 per ..
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“We expect Titan to report flattish revenue growth for September quarter. Nevertheless, we continue to believe its long-term fundamentals remain intact. In the absence of higher investment opportunities in the sector, Titan would continue to command high valuations,” Dolat Capital said in a note.

This brokerage has an 'accumulate' rating on the stock, as it believes the company may manage to meet its 20 per cent jewellery segment revenue guidance for FY20.

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“We estimated 14 per cent jewellery revenue growth for June quarter, but the actual growth was below our expectation. We attribute this to the gold price increase in mid-June and July (up 23 per cent YoY in Q2), which resulted in volume slowdown. Nevertheless, gradual improvement in sales (July to September) hints that the company would be able to meet its target of 20 per cent sales growth in H2FY20E,” it said.

While retail sales declined in July, retail growth was 15 per cent YoY between August and September, possibly due to higher promotions and schemes, the Tata group company told BSE.

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Retail sales or secondary sales rose 7 per cent in Q2 but revenues as per the financials declined 2 per cent YoY due to the adverse impact of the hedges that 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 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.
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