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Home >Markets >Mark To Market >TTK Prestige’s Q1 doesn’t impress, but outlook is improving

After a spectacular March quarter, TTK Prestige Ltd's June quarter (Q1FY22) results are a tad underwhelming. That’s understandable given the adverse impact of the covid-19 second wave.

TTK Prestige’s standalone revenues for the June quarter increased as much as 71% year-on-year to Rs357 crore, but they have declined by 36% vis-à-vis the March quarter. Of course, year-on-year growth is helped by a favourable base, as last year’s June quarter was severely hit owing to the pandemic restrictions. Even so, revenue decline was curtailed to around 18% compared to the June 2019 quarter, which doesn't appear too bad. According to TTK Prestige, in 2021, April and June months were much better compared to previous year. Further, the e-commerce channel performed well last quarter and its contribution to revenue stood at 32%.

Be that as it may, earnings before interest, tax, depreciation and amortization (Ebitda) margins are lower than some analysts’ expectations. TTK Prestige’s June quarter Ebitda margins have expanded by 720 basis points year-on-year to 11%. One basis point is one-hundredth of a percentage point. However, Ebitda margin has contracted by around 750 basis points compared to the March quarter.

“We believe Ebitda margin will revert to its strong level during FY22. TTK’s market leadership (in five of its six product offerings) and a broad range of products give visibility on quicker recovery in the business with stable demand," said analysts from HDFC Securities Ltd in a report on 28 July.

Meanwhile, TTK Prestige has taken price hikes in the range of 5-6% in July to compensate for the impact of raw material inflation. To be sure, analysts broadly remain upbeat on the prospects of the company. “We model TTK Prestige to report an earnings CAGR of 16.5% over FY21-FY23E with: (1) strong volume growth, (2) price hikes and (3) market share gains from unorganized sector," said ICICI Securities Ltd analysts in a report on 28 July. CAGR is short for compound annual growth rate. So far in calendar year 2021, the TTK Prestige stock has outperformed the Nifty 500 index by a good margin.


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