Jhunjhunwala trims stake in Titan, 2 others in Q4; buy Fortis Healthcare

During the March quarter of the financial year 2020-21 (Q4FY21), Rakesh Jhunjhunwala offloaded a 0.26 percentage point stake, or 2.25 million shares, in Titan Company

Ace investor Rakesh Jhunjhunwala trimmed stake in three firms, including Titan, and increased in one during the January-March quarter (Q4), the latest shareholding pattern available on BSE shows.

Besides Titan, he cut stake in Tata Communications, another Tata Group firm, and VIP Industries following weak performance in the March quarter while lapped up shares of hospital chain Fortis Healthcare.

During the March quarter of the financial year 2020-21 (Q4FY21), Jhunjhunwala offloaded a 0.26 percentage point stake, or 2.25 million shares, in Titan Company, bringing down his holding to 3.97 per cent from 4.23 per cent at the end of December quarter following underperformance in the stock vis-a-vis BSE Sensex. The stock dipped nearly 1 per cent as against a 4 per cent rise in the benchmark during the March quarter.

This is the second straight quarter where Jhunjhunwala has cut stake in this Tata group company. During the third quarter of FY21, he had sold a 0.20 percentage point stake.

Rakesh, along with his wife Rekha Jhunjhunwala, has a combined 5.06 per cent holding in Titan at the end of March 2021.  

Analysts, however, remain bullish on the jewellery maker and believe its long-term structural story remains intact despite near-term headwinds.

"We believe the spike in Covid-19 cases, region-wise lockdowns and restriction in operations are likely to impact near term sales, however, omnichannel strategy across jewellery, watches and eyewear will neutralise impact to some extent, said analysts at Prabhudas Lilladher who upgraded the stock to 'Accumulate' from 'Hold' following its Q4 business update.

It has revised Titan's FY21 estimates by 2.8 per cent on the back of better than expected recovery in jewellery and eyewear division, while cut estimates for FY22/23 by 0.6 per cent/0.9 per cent due to marginal margin contraction of 10bps/20bps.

As per ICICI Securities, despite various headwinds, Titan has, over the years, withstood challenges and emerged as a resilient player. 

"Focus on markets share gains and maintaining balance sheet strength (RoCE: 30 per cent+) position Titan as our preferred pick in the discretionary category. We broadly maintain our estimates for FY22-23E and build in revenue, earnings CAGR of 14 per cent, 22 per cent, respectively, in FY20-23E," the brokerage said. It has a BUY rating on the stock with a target price of Rs 1,830.

That apart, Rekha Jhunjhunwala cut stake in Tata Communications by 0.08 percentage points, or 2.5 lakh shares, in the March quarter to 1.04 per cent from 1.12 per cent she held at the end of the previous quarter of FY21. Her name had appeared among the minority shareholders of the company during the December quarter.

It could not be ascertained if she held a stake in Tata Communications before that as companies are mandated to report shareholders having 1 per cent or more stake in them.

Rakesh Jhunjhunwala's holding also came down in VIP Industries amid the second wave of Covid onslaught in the country. Rakesh's shareholding declined by 2.29 percentage points, or 4.22 million shares, in VIP to 2.32 per cent with only Rekha's name appearing among the key shareholders. 

Shares of Tata Communications and VIP Industries have declined by nearly 3 per cent each during the March quarter.

At the same time, he has increased his stake in Fortis Hospital by 0.34 percentage points, or 2.55 million shares, with only Rekesh Radeshayam Jhunjhunwala holding a total of 4.3 per cent stake as against 1.79 per cent held by him in the previous quarter along with 2.18 per cent held in the name of Rekha Jhunjhunwala. 

Shares of this smallcap firm have risen nearly 29 per cent during the said period, outperforming benchmark Sensex.