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Target: ₹975
CMP: ₹786.80
TTK Prestige Ltd (TTK), the flagship company of TTK group, mainly operates in the Kitchen Appliances segment. The company has 5 manufacturing plants and a strong distribution network, including 670 Prestige Xclusives.
We revise our Target to ₹975 (from ₹1,225) factoring moderate revenue growth, but upgrade to Buy due to recent correction in price and and strong margins.
Q3-FY22 revenue grew by 5.5 per cent y-o-y (-11 q-o-q) despite high base (24 per cent y-o-y in Q3-FY21) and shifting of Diwali festive sales to Q2-FY22 aided by price hike and healthy demand from rural.
Sharp surge in commodity prices impacts cost of production, but the company has taken necessary price hikes in recent quarters.
Gross margin improved by 90 bps to 42.4 per cent (40.1 per cent q-o-q) despite surge in input costs aided by price hike while EBITDA margin maintained at 16.9 per cent Vs 17.0 per cent y-o-y and 16.7 per cent q-o-q.
TTK targets ₹5,000 crore revenue by FY25 and has almost doubled its capacity for cookware segment and has significantly expanded distribution in high growth areas.
Demand outlook is positive given strong thrust of GoI to revive the economy and ongoing vaccination. We value TTK at 35xFY24 EPS. The Government's strong thrust to revive the economy and ongoing vaccination will support demand. TTK has strong balance sheet and brand recall.
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