Rekha Jhunjhunwala-held two stocks get ‘buy’ recommendation post Q3 numbers

However, Rakesh passed away on August 14, 2022. But his estate including shares and property is passed on to his family. His wife Rekha Jhunjhunwala has been diversifying his and her stock portfolios since then.

As per Trendyne data, Rekha Jhunjhunwala holds 45,895,970 equity shares or 5.2% in Titan by end of the December 2022 quarter, while she holds 100,753,935 equity shares or 17.3% in Star Health.

Titan is the top stock in terms of shareholding value in Rekha’s portfolio, followed by Star Health, Metro Brands, Tata Motors, and CRISIL.

As of February 3rd, as per the data, Rekha’s shareholding in Titan is valued at nearly ₹11,305 crore, while in Star Health it is around ₹5,158 crore.

Last week, on Friday, Star Health shares closed at ₹512.50 apiece down by 1.03% on BSE. On the other hand, Titan’s share price skyrocketed by 6.87% to end at ₹2,463.20 apiece on the exchange.

Star Health and Allied Insurance:

In Q3FY23, Star Health posted a net profit of ₹210 crore versus loss of ₹578 crore in the same quarter last year. Gross Written Premium (GWP) jumped by 14% YoY at 3,097 crore in the quarter.

According to ICICI Direct, Star Health is expected to maintain its leadership in the retail health segment with sustainable long-term growth opportunity. Higher than industry growth and targeted combined ratio of 95-96% provides confidence.

Thereby, the brokerage has maintained a ‘Buy’ rating on the stock. However, it added, “given the risk of increase in competitive intensity driven by regulatory changes, we lower our valuation multiple at ~1.9x FY25E GDPI to arrive at a revised target price of ₹650 from ₹850 earlier. However, fundamental strength provides comfort.”

Among key price triggers in the future for Star Health as per ICICI Direct are:

– Price hikes coupled with an increasing proportion of specialised products to aid premium growth at 20-22% and maintain market leadership.

– Improving footprints in rural India, increase in bancassurance tie-up along with strengthening of own agency channel to propel business momentum.

– Expansion of hospital tie-ups and faster claim settlement to keep the claim ratio at 62-65%, thus resulting in a combined ratio of 95-96%.

– Strategy to enter the life insurance business subject to regulatory approval and any regulatory change to intensify competition needs to be watched.

Titan Company:

During the third quarter of FY23, Titan’s net profit dipped by 3.7% YoY to ₹951 crore. Sale of products grew 11% to ₹10,444 crore as against ₹9,381 crore crore in the December quarter of the year-ago period.

On Titan, the brokerage said, “Titan has been an exceptional performer in the discretionary space with stock price appreciating at ~30% CAGR in last five years.” ICICI Direct added, “we continue to remain structurally positive on the stock as high growth visibility justifies premium valuations and maintain a BUY on the stock.”

The brokerage has set a target price of ₹3,030 for Titan.

Key price triggers for Titan in the future are:

– Robust balance sheet and asset-light distribution model have enabled it to outpace peers in terms of store addition.

– Aspires to grow jewellery revenues by 2.5x by FY27 (implied CAGR: 20%). Huge headroom for growth with a current market share at ~7% in ₹4 lakh crore market.

– Thrust on wedding space is bearing fruit with wedding jewellery becoming a critical growth driver while its share in overall jewellery revenue has increased meaningfully

– Gradual recovery in studded ratio to aid gross margins, going forward.

Meanwhile, Centrum in its report said, “We are sanguine on Titan’s operating performance led by strong pent-up demand across businesses segments. We note Titan’s strategy revolving around serving millennials, meeting their aspirational demand with the introduction of new designs and channels, could pay richly. Further industry formalization showing up in market share gains for Titan at 6.8%. The turnaround in the Caratlane, watches, and eyewear divisions and continuity in their profitability potential not yet priced in. We maintain a positive view and expect stable gains in margin. We tweak FY23E/FY24E revenue/ earnings by 5.6%/8.6% & 2.7%/3.0% respectively and retain BUY, with a revised DCF-based TP Rs3,178 (implying 63.8x avg. FY24E/FY25E EPS).”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.