Hello User
Sign in
Hello
Sign Out
Subscribe
Next Story
Business News/ Markets / Mark To Market/  TTK Prestige feels the heat as rivals turn up competition

TTK Prestige feels the heat as rivals turn up competition

  • Weak demand, particularly in the mid-range segment, is a worry.
  • The revamp of the ‘Judge’ brand and likely improvement in exports might offer some relief in FY25

TTK Prestige reported a modest 2% year-on-year consolidated revenue growth to 623 crore in the March quarter.

TTK Prestige Ltd, the maker of kitchen appliances and cookware, is struggling to maintain profitability as increased competition erodes margins, especially in their bread-and-butter entry-level products. Additionally, consumer spending has shifted towards other discretionary items, making it challenging to boost sales.

TTK Prestige Ltd, the maker of kitchen appliances and cookware, is struggling to maintain profitability as increased competition erodes margins, especially in their bread-and-butter entry-level products. Additionally, consumer spending has shifted towards other discretionary items, making it challenging to boost sales.

Against this backdrop, a modest 2% year-on-year consolidated revenue growth to 623 crore in the March quarter (Q4FY24) isn’t surprising.

Hi! You’re reading a premium article! Subscribe now to continue reading.

Subscribe now
Already subscribed?

Premium benefits

  • 35+ Premium articles every day
  • Specially curated Newsletters every day
  • Access to 15+ Print edition articles every day
  • Subscriber only webinar by specialist journalists
  • E Paper, Archives, select The Wall Street Journal & The Economist articles
  • Access to Subscriber only specials : Infographics I Podcasts

Unlock 35+ well researched
premium articles every day

Access to global insights with
100+ exclusive articles from
international publications

5+ subscriber only newsletters
specially curated by the experts

Free access to e-paper and
WhatsApp updates

Against this backdrop, a modest 2% year-on-year consolidated revenue growth to 623 crore in the March quarter (Q4FY24) isn’t surprising.

While online channels offer a glimmer of hope, traditional stores are underperforming. Even aggressive sales promotions failed to improve profitability. While TTK Prestige squeezed a little more efficiency out of production, operating leverage took a hit. As a result, Q4 Ebitda (earnings before interest, taxes, depreciation, and amortization) margin fell 74 basis points (bps) to 12.4%.

Read More: Devyani's domestic struggles continue as it integrates Thai acquisition

Following the results, Yes Securities has lowered its FY24-26E growth forecast to 9.5% revenue CAGR versus the earlier expectation of 11%. However, the brokerage remains “mildly positive" on the stock, “as company has performed relatively better than peers in the challenging environment and it will be the first one to bounce back once the demand trends improve."

Amid stiff competition, TTK Prestige has managed to retain its market share in most key areas. For the year as a whole, its Ebitda margin contracted by 157 bps to 11.3% in FY24, with revenues declining by 3.6% to 2,678 crore. “However, there was revival in H2FY24 with 3.6% revenue growth YoY. We believe it indicates higher growth in FY25," said a report by ICICI Securities.

The revamp of the ‘Judge’ brand, targeted at the mass market, might offer some relief in FY25. Nevertheless, weak demand, particularly in the mid-range segment, is a worry.

More Here | Zomato: It’s time for investors to open their eyes to Blinkit

Also, its multi-brand strategy is a work-in-progress. The company expects demand trends to improve in the coming quarters, citing a long-awaited shift in consumer spending towards kitchenware and the positive back-ended impact of strong real estate sales on kitchen appliance demand. With this shift in demand, the kitchen appliances manufacturer anticipates mid-teen growth.

Moreover, it expects exports to improve in FY25, and is eyeing the developed European economies, aiming to diversify export portfolio. This is already showing promise, with TTK Prestige successfully adding two new European clients in Q4FY24.

Looking ahead, investments in the modernization of manufacturing plants might eventually lead to long-term savings. Its ability to adapt and innovate will determine the rate of future success.

For now, investors may wait for meaningful signs of improvement in demand before placing their bets. Currently, the shares trade at 34 times one-year forward price-to-earnings multiple, according to Bloomberg data, and are down 16% from their 52-week highs of 832.70 seen on 6 September.

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.
Get the latest financial, economic and market news, instantly.