#FMCGDiaries - TITAN TURNS THOUSAND

TITAN TURNS THOUSAND

Titan hit the 4-Digit mark on auspicious Akshaya Tritiya. At 1000 Rupees, the market cap of Titan crosses 88000 Cr, placing the company at the 33rd spot in the list of Indian companies with the highest Market Capitalization

REMEMBER THE TITAN

A trip down memory lane and one can see the massive power of compounding this company has displayed. From a Watch Co to a Jewellery Co, the Stock price of Titan has surged from Rs. 56/sh 10 years ago to 1000 now. If you stretch the time beyond 10 yrs, 15 yrs ago the adjusted price of Titan was Rs. 2.5/sh. A gold mine, for those who discovered it then and held on.

BIG BULL’s BIG BET

A notable name which associates itself with Titan is Big Bull Rakesh Jhunjhunwala. RJ and Family as of March 2018 hold 7.5 Cr shares in Co, that’s now worth 7500 Cr (just over a billion dollars). Again reinforces the old adage, “if you find a good co, back your truck, tank up and hold on.”

TITAN V/S GOLD

Talking about old adages, Gold is pretty dear to us Indians and we’ve heard about the wealth creating properties of the Yellow Metal. A quick look at the data suggests the same, but it also suggests that in the last 15 yrs, Titan has returned more bling for the buck as compared to Gold. 10 Yrs Ago, Gold was available at 12500/10 gms and the same was available at 5600/10 gms 15 Yrs ago. Today the price of gold quotes around `32000/10 gms. So if you look at the Compounded Annual Returns over the last 10 or 15 Yrs, Titan has outshone Gold by a fair margin. This is not to suggest that this outperformance may continue. But, if the company continues to post strong earnings growth and gain market share, it may very well do.

TITAN Stock Returns

                             CAGR

10 yr                       33%

15 Yr                       49%

GOLD Returns

                             CAGR

10 yr                       6%

15 Yr                       19%

TOO MUCH PRICE FOR GOLD? OR DIAMOND FOR THE PRICE OF GOLD?

At 1000 Rupees a piece, one may argue that the valuations are stretched. Titan Trades at 55X FY19e & 40X FY20e. Morgan Stanley this morning has actually downgraded their outlook on the stock. They find themselves “reluctant to push multiples beyond current levels.” However, they add “the company remains one of our favorite plays on urban discretionary consumption growth in India, with huge untapped growth potential.” While, multiples cannot be pushed beyond a certain limit, one must keep a close eye on the earnings of Titan.

Much Love.

M

PS:Don't treat any of these as investment ideas; I personally Don't Invest/Trade.

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