Jhunjhunwala stock: UBS sees Titan on cusp of major rebound; shares gain 2%

Shares of Titan Company Ltd gained 2 per cent in Thursday’s trade after UBS upgraded the Rekha Jhunjhunwala portfolio stock to ‘Buy’ from ‘Neutral’, while raising its price target to Rs 4,700 from Rs 3,600 earlier.

UBS described Titan as an “impressive player in the jewellery industry” backed by strong brands, consumer trust, and scale advantages. The brokerage noted that concerns around intensifying competition and the potential impact of lab-grown diamonds (LGDs) have been overhangs, but an UBS Evidence Lab survey indicates that the LGD threat remains manageable. UBS added that Titan’s overall value proposition continues to be competitive and, supported by attractive valuations, it expects an earnings rebound ahead.

The stock rose 1.83 per cent to hit a high of Rs 3,797.40 apiece.

"After two years of stagnation, we believe Titan's shares are positioned for a strong rebound. Titan has delivered c20 percent jewellery revenue growth in the past two years despite a gold price spike. With a jewellery margin reset (in its quest to keep a competitive gold price for consumers) in the past, we foresee a major earnings rebound (+46% and +21% in FY26 and FY27 after a muted FY25)," UBS said.

UBS said LGDs do not pose an immediate threat and Titan's strategy of waiting and watching LGDs is sensible. Titan's valuation is appealing at 6 per cent discount to five-year-average PE, UBS said. Its upside scenario analysis suggests upside potential of c25 per cent.

UBS said Titan is a structural winner. It revised its earnings estimates for the Tata group firm, valuing it at 60.9 times NTM PE, which is 8 per cent discount to five-year median. UBS believes Titan's valuation is quite tenable and appealing.

"As its earnings rebound, we expect its multiple to rise towards the five-year average. Key downside risks to our Buy rating include a sharp gold price rise, along with a rising intensity in price competition that weighs on growth and margins," it said.