TTK Healthcare - 4QFY2013 Result Review - Angel Broking

TTKH reported a disappointing set of numbers for 4QFY2013. Topline came in at Rs. 86cr, 2.2% decline on a yoy basis from Rs. 88cr in 4QFY2012 and 11.7% lower from our estimate of Rs. 97cr. The EBITDA margin for the quarter contracted by 224bp yoy to 3.7% primarily due to increase in other expenses as compared to 4QFY2012. The margin contraction was attributable to loss of Rs. 3cr in the consumer products division. Consequently, net profit declined by 39% to Rs. 2cr on 4QFY2012.

For FY2013, revenue growth stood at modest 8.1% yoy to Rs. 382cr from 354cr in FY2012. While EBITDA margin contracted by 145bp to 5.3% on account of increase in overall expenses. This led to a 9.5% yoy decline in net profit to Rs. 14cr in FY2013.

Going forward we expect the EBITDA margin to expand on account of increasing contribution from high margin business like food business, thus resulting in better profit. At the current market price, the stock is trading at EV/sales of 0.7x for FY2015E, which we feel is attractive. Hence, we maintain our buy recommendation on the stock with a target price of Rs. 667 based on a target EV/sales of 0.9x for FY2015E.

Source : Equity Bulls

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