Titan Company Ltd on Wednesday saw its share price touch four digits for the first time in pre-market trade, boosting its market capitalisation to over Rs 88,000 crore, and pushing it to the 33rd spot in the list of cmpanies with the highest market capitalisation.
The jewellery maker hit this milestone on Akshay Tritiya, a day on which many Indians buy gold, and consider an auspicious day to start new ventures.
REMEMBER THE TITAN
On a trip down memory lane, one can see the massive power of compounding this company has displayed.
From a watch-maker to a jewellery company, the stock price of Titan has surged from Rs 56 per share 10 years ago to Rs 1000 now.
If one stretches the timeline beyond 10 years, it is seen that 15 years ago the adjusted price of Titan was Rs 2.5 per share, 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.
Jhunjhunwala and family held about 7.5 crore shares in Titan as of March 2018, a holding that’s now worth Rs 7500 crore or just over a billion dollars.
This again reinforces the old adage, “if you find a good company, 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 compared to gold.
Ten years back, gold was available at Rs 12,500 for 10 grams, and 15 years before that, gold stood at Rs 5,600 for 10 grams.
Today the price of gold quotes around Rs 32,000. So if one looks at the compounded annual returns over the last 10 to 15 years, 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 so.
DIAMOND FOR THE PRICE OF GOLD?
At Rs 1000 a share, one may argue that the valuations are stretched. Morgan Stanley has downgraded their outlook on the stock, on Wednesday. They find themselves “reluctant to push multiples beyond current levels.”
The stock was trading at Rs 986.35 per share at 10:49 IST on the National Stock Exchange.
However, they say “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.