Home / Markets / Mark To Market /  TTK Prestige shares rebound, but festive season crucial

Shares of TTK Prestige Ltd, a kitchenware and appliance maker, have increased by almost 34% from their 52-week lows seen on 17 June on NSE. This has helped the stock recoup losses of the first five months of calendar year 2022. The recovery is also in keeping with the rise in broader markets, said analysts.

The stock is now nearly at the same levels as at the beginning of this year.

TTK Prestige’s shares trade at 35 times estimated earnings for FY24, according to Bloomberg data. Some analysts reckon the scope for meaningful near-term upsides appear limited, given the expected margin pressure in the September quarter (Q2FY23). The company is carrying high-cost inventory, the impact of which would be felt on margins this quarter.

catching up
View Full Image
catching up

Additionally, Q2 revenue growth is expected to be muted on last year’s high base. As such, the benefit of softening commodities is anticipated to reflect from Q3 onwards.

You might also like

Trade ministry mulls sops for hotels, tourism

Nirma vies for Maneesh Pharma stake

Why buzz around tyre stocks has picked up pace

What a fitness trainer learnt on his investment journey

TTK Prestige maintains high inflation has impacted the consumption of entry-level products in the kitchen appliances segment. “However, the premium products’ market continues to depict strong demand pull. Early Diwali may also result in higher sales in September 2022," said analysts from ICICI Securities Ltd based on their interaction with the management of TTK Prestige. Continued momentum in the premium category is margin accretive at the company level.

“We model TTK to report revenue and earnings CAGR of 14% and 10.7% over FY22-FY24E with strong volume growth, stable margins of about 15%, and market share gains from the unorganised sector," said analysts from ICICI Securities in a report on 6 September. CAGR is compound annual growth rate.

The path ahead is not particularly rosy. Increased competition poses a risk. “Although home improvement and new housing theme is expected to sustain, we believe rising competition (renewed Butterfly under Crompton) will continue to keep earnings for TTK in check," said analysts from HDFC Securities Institutional Research in their Q1 results review.

Overall, in view of the disruptions caused because of the covid-19 pandemic, TTK has rolled forward its 5,000 crore revenue target by two years to FY27. Meanwhile, TTK’s UK subsidiary, Horwood Homewares, is suffering because of the steep inflation in the region amid the ongoing geopolitical crisis. A sustained delay in improvement on this front is a risk.

The stock has seen a smart rebound lately, but TTK’s shares are still down 21% from the 52-week highs seen on 14 December.

Elsewhere in Mint

In Opinion, Ajay Piramal & Monal Jayaram argue why literacy should be much more than what it means today. Parmy Olson explains how contact lenses are replacing phone screens. Deepak Nayyar argues growth is more than arithmatic and economics. Long Story predicts the future of moonlighting in Indian companies.

ABOUT THE AUTHOR

Pallavi Pengonda

Pallavi Pengonda is a financial journalist producing cutting edge commentary and analysis on companies, economy and market trends. Over her journalism career spanning more than 14 years, she has covered topics across sectors such as oil & gas, consumer, aviation and new age tech companies. She heads the Mark to Market team and joined Mint in June 2010. She lives in Bengaluru. She is an art enthusiast and likes to paint in her leisure time.
Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout