On going through the FY21 annual report, we maintain our positive stance on TTK Prestige. The company has emerged stronger in FY21 and the growth momentum would continue in FY22 as product range and geographic reach continue expanding pan-India, supported by SKU expansion. Growth in cleaning solutions can be high as the company intends this brand to be the first across all India in this category, on levering its marketing network and brand proposition. Exports are another growth lever, which can deliver.
Innovation continues unhindered despite FY21 being challenging: Innovation and convenience seem to be key differentiators for TTK and have supported growth in an extremely competitive market. The trend continued unhindered in FY21 as the company’s entire range of pressure cookers was upgraded to the Swatch platform. Also, TTK entered casseroles in FY21. It launched 127 SKUs in FY21 and plans to launch another 100 in FY22.
Exports on a spree / import dependence being reduced in FY21: TTK is also keen on ramping up exports as several global brands, which depended on China, are diversifying their supply chains. FY21 exports were Rs 714million, up 70% y/y on the lower base. Effective Oct’20, TTK stopped imports from China, resulting in non-availability of some SKUs in Q2 FY21. However, it plugged supply-side constraints by increasing capacity and building a supply chain in India.
Valuation: In preparing this note, we have not altered our estimates. We maintain our ‘buy’ recommendation on the stock with an unchanged target price of Rs 9,897, (37x FY23e EPS of Rs 267.50). At the CMP of Rs 8,529, the stock trades at 41x/ 32x FY22e/FY23 EPS of Rs 206/267.50. Risks: Constrained demand for kitchen appliances, which could impact the company’s domestic business growth prospects. Unfavourable sentiment across the United Kingdom, which could hurt the demand prospects of its subsidiary, Horwood.