Jhunjhunwalas lost nearly Rs 3,500 cr in this Tata Group stock in 3 months

Titan Company has slipped 7 per cent to Rs 1,925 in intra-day trade on Friday and has shed 29 per cent in the past three months.

Billionaire investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala lost nearly Rs 3,500 crore in Tata Group company Titan in the last three months, as the stock crashed 29 per cent during the period.

The value of Jhunjhunwalas' holding in Titan Company fell by Rs 3,489 crore since March 17, 2022. The stock hit a nine-month low of Rs 1,925 and was down 7 per cent on the BSE in intra-day trade on Friday. The stock traded at its lowest level since September 2021, after it had hit a record high of Rs 2,767.55 on March 21, 2022.

Rakesh Radheshyam Jhunjhunwala (3.98 per cent) and Rekha Rakesh Jhunjhunwala (1.07 per cent) collectively held 5.05 per cent stake in Titan Company at the end of March 2022 quarter, the shareholding pattern data shows. In the past three months, Titan Company has lost Rs 69,092 crore market capitalisation to hit Rs 1.71 trillion in intra-day trade today.

Titan is a market leader in the domestic branded jewellery market (with Tanishq, Caratlane, Zoya and Mia brands) and in the domestic wristwatch segment (with brands such as Titan, Sonata, Fastrack and Xylys).

In the past three months, Titan Company has underperformed the market, which was down 11 per cent, as the company reported a 7.21 per cent year on year (YoY) decline in its consolidated net profit at Rs 527 crore in the fourth quarter ended March 2022 (Q4FY22).

The company’s total income rose 3 per cent to Rs 7,352 crore as against Rs 7,169 crore in the corresponding quarter last year. Higher operating expenses resulted in EBITDA declining by 3 per cent YoY to Rs 794 crore. EBITDA margins declined 70 bps YoY to 10.2 per cent.

Analysts at HDFC Securities suspect Titan’s customer acquisition cost could rise as gold exchange rises in sourcing mix during periods of uncertain demand/high inflation - a deterrent to its punchy valuation.

Last month, Brickwork Ratings reaffirmed the ratings for the bank loan facilities and commercial papers of Titan Company amounting to Rs 7,500 crore. “The ratings also factor in the strong liquidity, sound capital structure and absence of long-term debt, strong financial flexibility, and prudent financial and risk management practices. The rating strengths are partially offset by exposure to regulatory interventions and gold price volatility, which impact the demand-supply scenario in the intensely competitive retail jewellery industry and pressure on the margins in the watches segment,” the rating agency said in rating action/outlook. CLICK HERE FOR FULL REPORT

Tech view

Outlook: Negative

Downside target: Rs 1,832

The shares of Titan Company slumped over 7 per cent in intra-day trade on Friday, breaking below their lower end support of the Bollinger Band at Rs 1,997, shows the daily chart. With this, the stock may be heading towards its next support level of Rs 1,832, which is its 100-week moving average (100-WMA).

The price-to-moving average action is extremely bearish with negative crossovers of 20, 50, 100, and 200 DMAs. The momentum oscillators such as Slow Stochastic, MACD, and Directional Index, too, suggest a dowwar trend. The 14-Day RSI is the only indicator which has entered oversold zone with today's slide in share price.

(With inputs from Nikita Vashisht)