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TTK Prestige - Q1FY21 Result Update - ICICI Securities

Posted On: 2020-08-12 00:21:09

Given the fact that ~45 days of the quarter was severely disrupted due to lockdown restrictions, TTK Prestige reported steady Q1FY21 results. Post lockdown relaxations, green shoots were visible with pent up demand towards the kitchen appliances & cookware segment. However, due to various restrictions, less than 60% of TTK's distribution channels were operational (LFS channels were impacted most). It reported revenue de-growth of 52% YoY to Rs. 208.5 crore (vs. estimated de-growth of 57% YoY). Among categories, cookers segment was impacted most with revenue de-growth of 59% YoY to Rs. 58.0 crore. Kitchen appliances, cookware categories de-grew 50%, 45% YoY to Rs. 106.0 crore, Rs. 35.0 crore, respectively. On the back of change in product mix, gross margins fell 200 bps YoY to 40.5%. However, cost optimisation measures (other expenses fell 54% YoY to Rs. 41.0 crore) led to report EBITDA profit of Rs. 7.9 crore (I-direct estimate: loss of Rs. 20.2 crore), with margins at 3.8%. Demand in July has been encouraging with the company reaching ~90%+ pre-Covid sales level.

Valuation & Outlook

The management is hopeful of H2FY21 being significantly better than H1FY21 on the back of higher traction in revenues during the festive season and further opening up of distribution channels such as LFS. 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. The company continues to be virtually debt free and have substantial free cash worth Rs. 300 crore. With earnings in the short-term expected to be negatively impacted, TTK, through its strong promoter pedigree and brand patronage, is expected to tide over the current situation better than smaller peers. We build in revenue and earnings CAGR of 6% and 13%, respectively in FY20-22E. We reiterate BUY rating on the stock with a target price of Rs. 6300 (37x FY22E EPS).

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Shares of TTK PRESTIGE LTD. was last trading in BSE at Rs.5483 as compared to the previous close of Rs. 5491.65. The total number of shares traded during the day was 354 in over 194 trades.

The stock hit an intraday high of Rs. 5579.9 and intraday low of 5304.9. The net turnover during the day was Rs. 1920602.

Source: Equity Bulls

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