The stock of TTK Prestige hit a high of Rs 3,231 on the BSE in intra-day trade after CLSA came out with a buy recommendation with a price estimate of 26 per cent higher than Tuesday's close. The stock had a life-time high of Rs 3,239.35 on February 10..
TTK Prestige closed at Rs 3,188.25, a gain of Rs 407.5 or 14.65 per cent over the previous day's close on a day when the BSE Sensex and NSE's Nifty scored handsome gains for the first time after the Budget presentation. About 2.08 lakh shares changed hands on the BSE as against the two-week average of 19,000 shares.
Stake speculation
There was also market speculation that global major Philips is in talks to buy entire promoters stake in TTK Prestige that might lead to delisting eventually. Promoters hold 74.91 per cent stake in the company.
However, the company denied this as rumour. Mr Chandu Kalro, Executive Vice-President, Marketing, TTK Prestige, said “it was completely false” and that the company would issue a clarification on the same soon.
A close business associate of TTK Prestige also said that “the news was not true at all.”
It may be recalled that Royal Philips Electronics had acquired the assets of the Preethi business, a leading kitchen appliances company in India in 2011.
CLSA Asia-Pacific Markets analysts, Mr Jaibir Sethi and Mr Anirudha Dutta wrote in a report on Wednesday said the kitchen appliances maker is well placed to benefit from market growth driven by rising consumer spend, evolving lifestyles and preferences and broad demographic trends.
Recommendations
TTK Prestige has grown revenues at 27 per cent annually in the past five years. “Looking ahead, continuing expansion in the product portfolio as well as the push in expanding the network of flagship stores (300+ currently, 1,000 target over four years) will help sustain a 29 per cent CAGR over FY12-14 and drive further market share gains,” according to the CLSA analysts, who set a target price of Rs 3,500 a share for the stock.
They expect the company's earnings to climb 31 per cent annually during the period.
“TTK Prestige has deep penetration into rural and urban markets (30,000 retailers and 340 exclusive stores), strong brand recall, product innovation, increasing capacity and focus on high-growth segments. These factors, in our view, should lead to 36 per cent earnings CAGR over FY11-14e. We initiate coverage with a buy and price target of Rs 3,647,” said Anand Rathi report early this month.