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  1. Maintain ‘buy’ on TTK Prestige, target Rs 4,700: Motilal Oswal

Maintain ‘buy’ on TTK Prestige, target Rs 4,700: Motilal Oswal

TTK Prestige plans to introduce 100 new SKUs in FY16, of which 75 have already been launched. During the quarter, management launched ‘Clip On’ range of pressure cookers...

By: | Published: October 20, 2015 12:16 AM

TTK Prestige plans to introduce 100 new SKUs in FY16, of which 75 have already been launched. During the quarter, management launched ‘Clip On’ range of pressure cookers on a pilot basis in Bangalore and plans to roll out the product on a pan-India basis during 2HFY16. With a view to tap rural markets, TTKPT has introduced LED Lanterns — which management believes will be a good product to penetrate into rural areas. TTKPT is looking to buy a brand in Europe, the size of which will be limited to R4b, to tap the export opportunity.

Management guided for 10% revenue growth and 20% profit growth in 2HFY16. We expect FY16 revenue growth at 10%, along with ~100bp margin expansion—translating into 26% PAT growth. We cut our EPS estimates by 10%/9% for FY16E/FY17E, given the delayed export growth.

Management highlighted that price growth stood at 4% in cooker and cookware categories while volume growth accounted for the balance 3%. The southern market grew 6% while non-southern market grew 16% during the quarter. As a result of delayed festive season, management highlighted that festive demand will be reflected better in 3Q results as against 2Q in FY15. Management highlighted that ecommerce (which contributes 2-3% of overall revenue) is the fastest growing segment for the company and despite heightened activity in e-commerce, discounting trends are abating; this should drive growth higher going forward.

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