Appliances maker TTK Prestige has been the darling of the stock market in the past two years with its shares rising nearly four times whereas the Sensex fell 5.6 per cent.
The company saw sales zoom by 44.8 per cent and profits by 35.4 per cent in 2011-12.
But will the company be able to keep up its dream run, with the State Government taking to distributing kitchen appliances such as mixer grinders as freebies?
TTK Prestige, in its latest Annual Report, says that it sees an opportunity in this!
The company thinks that this trend will create a “decent” replacement market in the years to come. It is ‘continuously monitoring the situation and will have a dynamic set of strategies’ to capitalise on it.
Is that a hint that appliances supplied as freebies will require replacement not many years from now?
The company does expect the free supplies by the State Government to ‘commoditise’ the appliances markets. But as consumers tend to upgrade from unbranded products or local brands to the better-known names in appliances, it hopes that national brands such as Prestige will eventually gain, especially with the entry of multinationals and large domestic companies into the space.
In pressure cookers, points out the report, national brands have already been taking over market share from unorganised players.
In 2004-05, regional and unorganised players accounted for nearly half the market. But by 2011-12, their share fell to less than 40 per cent.
Data from the report also show that pressure cookers, once TTK Prestige’s mainstay, now account for a lower share of its revenues, down to 36.8 per cent of sales from 40.9 per cent the previous year.
Other kitchen appliances such as induction cooktops and mixer grinders brought in 31 per cent of sales from 24.9 per cent in the previous year.
At the beginning of 2011-12, the company had given a guidance that it expected to grow at a CAGR of 25 per cent over the next five years. Given that it witnessed 45 per cent growth in the first year itself, the prospects of meeting the target appear robust, particularly on account of the entry into new segments, it says.