TTK Prestige - Q2FY21 Result Update - ICICI Direct

TTK Prestige reported moderate topline growth of 2.9% YoY to Rs. 590.2 crore. The headline number does not reflect the underlying demand scenario. The recovery in demand for kitchen and home appliances has been robust and the company was unable to cope up with demand owing to slow ramp up of its own capacities coupled with supply chain constraints at the vendor's end. Hence, it lost sales of ~ Rs. 70 crore in July. The supply side issues are largely behind. Since August, the company has been on a strong growth path with August and September revenues growing over 20% YoY. Gross margins for the quarter contracted 260 bps YoY to 39.5% owing to higher share of online sales. However, a reduction in overheads (employee and other expenses down 6% and 5%, respectively), led EBITDA margins to decline 50 bps YoY to 14.6% (I-direct estimate: 14.0%). Absolute EBITDA remained constant YoY at Rs. 86.0 crore. On the back of a steady operational performance, PBT remained flattish YoY at Rs. 83.0 crore. However, owing to lower tax rate in the base quarter (25.17% vs. 3.97% in Q2FY20), PAT declined 22.6% YoY to Rs. 62.2 crore. Demand for the festive season appears to be encouraging with TTK reporting strong growth of 15% YoY in October (on a high base).

Valuation & OutlookWith supply side issues mostly resolved and encouraging festive trends, we expect revenue trajectory to improve materially in H2FY21E. The company is augmenting its manufacturing capacities with additional lines to cater to the healthy domestic and exports demand (outlaid capex worth Rs. 50 crore in FY21E). We introduce FY23 estimates and build in revenue and earnings CAGR of 9% and 14%, respectively, in FY20-23E, with higher RoIC of ~30% in FY23E. TTKP continues to be virtually debt free and has substantial free cash worth Rs. ~470 crore. We reiterate our BUY rating on the stock with a target price of Rs. 6900 (35x FY23E EPS, previous TP: Rs. 6300).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TTKPrestige_Q2FY21.pdf

Shares of TTK PRESTIGE LTD. was last trading in BSE at Rs.5787.15 as compared to the previous close of Rs. 5763. The total number of shares traded during the day was 248 in over 88 trades.

The stock hit an intraday high of Rs. 5900 and intraday low of 5751.1. The net turnover during the day was Rs. 1437544.

Source : Equity Bulls

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