TTK Healthcare - Latin Manharlal Securities

Incorporated in 1958, TTK Healthcare Ltd (TTKHL) is a diverse company operating through its Pharmaceuticals, Consumer products, Biomedical devices, Foods and Maps divisions. The company is part of the TTK group, which has business interests in the core products of kitchenware, pharmaceuticals, medical devices, food products, condoms, and other products.

Strong Product portfolio

The Company's brand wagon consists of products that are sought after by a wide range of customers. The company operates in Personal care products offering the Eva range of women's personal care products in a variety of fragrances. It also markets and distributes Woodward's Gripe Water - the undisputed market leader in the baby care category - and the recently introduced Woodward's Baby Soap. It also handles the national distribution of Durex and Kohinoor brands of condoms and the Scholl range of foot care products manufactured by TTK-LIG Ltd and SSL-TTK Ltd.

Orthopaedic Implants - A huge growth potential area

TTKHL entered into Ortho implants business by acquiring Ortho implants business and assets from Invicta Mediteck. TTKHL' Ortho division has a technical collaboration with BP Trust USA. Under the collaboration, the company manufactures and markets Orthopaedic implants under the brand name 'TTK Altius- Hi-flex knee' in India. This is the only knee surgical implant manufactured in India with a USFDA approved design. The company claims that European or American made artificial knees are not suitable for Indians as they squat or sit cross legged whereas a BP Trust knee implant allows a person to perform these tasks.

Strong Distribution & Marketing network

TTKHL has an all India sales and distribution network for marketing not only their own products, but also the KIWI Brand (Shoecare), Brylcreem (Haircare). The Group's distribution strength includes 10,000 direct dealers stocking its consumer durables and more than 2,800 distributors stocking TTKHL's Consumer Products range.

Increasing presence in export markets

TTKHL's products are now sought after in the overseas markets and there is an increasing demand for the company's products in the Middle East, Africa, Asia, etc.

Plans to add new products in Medical devices segment

On the medical devices segment, the company plans to add new products including tissue valves and fixed bearing knees. It is expecting regulatory process to complete to import some of these products from Brazil.

Strong Financials + Cash rich Balance sheet+ Debt Free

- Sales have grown at a CAGR rate of 17.2% over the FY09-FY 12 period.
- PAT has grown at a CAGR rate of 25.7% over the FY09-FY12 period.
- Negligible debt of < Rs.1 Crs on its balance sheet as on 31st March 2012. Cash and Bank balance of Rs.62.0 Crs which is ~63% of total balance sheet size of Rs.98 Crs.
- Full Taxpaying company, average effective tax rate in last 3 years at ~33%
- Positive operating cash flows over past 5 years.
- TTKHL did Buy-Back of shares during FY09 and FY10.

At the CMP of Rs.370, the stock is trading at 14.2x its FY14E EPS of Rs.26.15. We recommend BUY on the stock with a 12-18 months target price of Rs.523, providing an upside of 41.4% from the current levels.

Source : Equity Bulls

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