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TTK Prestige - Q4FY20 Result Update - ICICI Securities

Posted On: 2020-06-28 18:07:35

TTK Prestige reported weak results due to Covid-19 disruptions impacting primary billing in the second half of March. Revenue de-grew 13.8% YoY to Rs. 383.5 crore (I-direct estimate: Rs. 397.6 crore). The company lost sales worth Rs. 70.0 crore due to inability to dispatch orders. Gross margins for the quarter improved 150 bps YoY to 43.6% on account of benign RM prices. However, unabsorbed fixed expenses and higher marketing spends, led to EBITDA margin contraction of 530 bps YoY to 9.2%, with absolute EBITDA declining 45.2% YoY to Rs. 35.2 crore. PAT fell 52.4% YoY to Rs. 20.9 crore. The management commentary on the outlook was upbeat with a surge in demand visible for kitchen appliances, post relaxations in lockdowns.

Valuation & Outlook

Over the years, TTK Prestige has maintained balance sheet prudence with stringent control on working capital cycle and healthy return ratios. Given the trade liquidity concerns, the company followed a cautious policy on primary sales through better optimisation of working capital (NWC days: 71 days). The company generated healthy operating cashflows worth ~Rs. 260 crore and FCF worth Rs. 200 crore in FY20. TTK continues to be virtually debt free and has substantial free cash worth Rs. 365.0 crore. With earnings in the short-term expected to be negatively impacted, the company, through its strong promoter pedigree and brand patronage, is expected to tide over the current situation better than smaller peers. We build in revenue, earnings CAGR of 6%, 13%, respectively, in FY20-22E. We reiterate our BUY rating on the stock with a revised target price of Rs. 6300 (37.0x FY22E EPS).

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Shares of TTK PRESTIGE LTD. was last trading in BSE at Rs.5663.9 as compared to the previous close of Rs. 5145.95. The total number of shares traded during the day was 1112 in over 490 trades.

The stock hit an intraday high of Rs. 5695 and intraday low of 5160.1. The net turnover during the day was Rs. 6121962.

Source: Equity Bulls

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