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After Q3 results, investors reward TTK Prestige’s best ever quarter generously

TTK Prestige continues to launch high-margin products and has also tied up with global brands such as World Kitchen and Meyer. Photo: Aniruddha Chowdhury/Mint (Aniruddha Chowdhury/Mint)Premium
TTK Prestige continues to launch high-margin products and has also tied up with global brands such as World Kitchen and Meyer. Photo: Aniruddha Chowdhury/Mint
(Aniruddha Chowdhury/Mint)

  • The meaningful appreciation in TTK Prestige’s stock price over the past few days, suggests investors are factoring a good share of the optimism into the price. Needless to say, subdued demand would be a risk going ahead

MUMBAI: Shares of kitchenware and appliance maker TTK Prestige Ltd have risen more than 20% since the company announced its December quarter results last week. Numbers were better than expected and the company said last quarter was its best ever. Standalone revenue growth in the three months ended December stood at 24% year-on-year. This is a vast improvement from about 3% growth seen in the September quarter.

What’s more, the company has indicated that January also turned out well. “Market demand continues to be robust with the company registering a growth of over 20% in January 2021," said TTK Prestige.

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In the last quarter, growth was broad based across segments, with cookers, cookware and appliances increasing 29%, 34% and 19%, respectively, over the same period last year. To offset rising raw material costs, TTK Prestige took a 9% price hike on a weighted average basis during the December quarter. Even so, gross profit margin declined nearly 30 basis points (bps) year-on-year to 41.5%. One basis point is one-hundredth of a percentage point.

Nonetheless, better operating leverage thanks to good revenue growth, helped earnings before interest, tax, depreciation and amortisation (Ebitda) performance. Ebitda margin expanded 220 bps year-on-year to 17.4%. The upshot: absolute Ebitda has increased by a robust 42% to Rs118 crore.

Analysts from IIFL Securities Ltd, in a report on 11 February, said, “We believe that the strong growth performance has been driven by multiple factors – normalising Covid situation, pent up demand (9MFY21 sales decline at 5%), and disruption in the unorganised segment, among others."

To be sure, the adverse impact of covid-19 restrictions has weighed on performance for the nine-ended December (9MFY21). For 9MFY21, year-on-year sales growth for cookers, cookware and appliances stood at -11%, 2% and -4%, respectively.

Meanwhile, the meaningful appreciation in TTK Prestige’s stock price over the past few days, suggests investors are factoring a good share of the optimism into the price. Needless to say, subdued demand would be a risk going ahead. In general, analysts view higher competition from the unorganised sector as one of the threats for the company.

“We revise our estimates to reflect improved demand prospects, now value TTK Prestige at 35 times March 2023 earnings per share and arrive at March 2022 target price of Rs7,800 and await better entry point," said JM Financial Institutional Securities Ltd in a report on 10 February. Currently, the stock trades at around Rs7125 apiece.

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