Add TTK Prestige, target price Rs 1000: HDFC Securities

Securities has add call on with a target price of Rs 1000. The current market price of TTK Prestige Ltd. is Rs 792.85. Time period given by analyst is one year when . price can reach defined target.

TTK Prestige Ltd., incorporated in the year 1955, is a Mid Cap company (having a market cap of Rs 10959.52 Crore) operating in Consumer Durables sector.

TTK Prestige Ltd. key Products/Revenue Segments include Domestic Appliances and Scrap for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 710.88 Crore, down -7.76 % from last quarter Total Income of Rs 770.72 Crore and up 17.81 % from last year same quarter Total Income of Rs 603.39 Crore. Company reported net profit after tax of Rs 80.61 Crore in latest quarter.

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Investment Rationale
TTK Prestige’s Q4FY22 revenue was a beat while EBITDA margin was a miss. Standalone revenue was up 17% YoY (HSIE 7%) and delivered a three-year CAGR of 13%. The revenue growth was driven by a strong performance in cookers, which were up 26% YoY (17% three-year CAGR). Gross margin contracted 501bps YoY to 40.6% (HSIE 43%). The company had taken some price hikes in Q4-end, the impact for which will be visible in the coming quarters. Tight cost control restricted the fall in EBITDA margin, which was at 16.3% (HSIE 16.9%), down 213bps YoY. EBITDA was up 3% YoY to 1,058mn (HSIE 1,002mn). The company has managed to protect its EBITDA margin in FY22 (consolidated margin at 15.6%); however, the brokerage expects the margin to trend downwards in FY23. It models single digit growth for cooker on sustainable basis, given this product is highly penetrated (90% urban penetration). It models 10% revenue CAGR between FY19-24E at company level. It projects FY23/24 EBITDA margin at 14.7/15.1% (14.9/15.6% for FY21/FY22). It maintains FY23/24 EPS estimates and value the stock at 38x P/E (40x earlier) on FY24E EPS to derive a TP of INR 1,000.

Promoter/FII Holdings
Promoters held 70.41 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.3 per cent, DIIs 13.19 per cent.

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