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Target: ₹857
CMP: ₹697.90
We revise our target price of TTK Prestige to ₹857 (from ₹1,025), factoring lower volumes and margins, but upgrade to Buy rating due to lower valuation.
Revenue declined by 9 per cent YoY in Q3-FY23 due to tepid demand amidst inflation and a shift in festival season. For 9M-FY23, growth was 7 per cent YoY. Operating margin declined by 550bps YoY to 11.4 per cent. Margin pressure is expected to reduce in the coming quarters as input prices declined.
Ultrafresh, the recently acquired modular kitchen business has recorded a sale of ₹17.6 crore in 9M-FY23. TTK has added 52 new stores (total 134 stores now) and expects about ₹200 crore in the next 3-4 years.
TTK aims to increase revenue to ₹5,000 crore by FY27 through organic & inorganic routes. TTK has doubled its capacity for the cookware segment and has significantly expanded its distribution networks.
Expect Revenue/PAT to grow at 10 per cent/17 per cent CAGR over FY23-FY24.
Barring short-term pressure on demand and margins due to high inflation, the long-term outlook is positive given rising middle-income households, improvement in the real estate sector, and easing input prices, along with TTK’s strong brand recall. We value TTK at 33x FY25 EPS (5 year avg=37).
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