TTK Prestige; Facing Short Term Headwinds

Shailendra Lotlikar / 18 Jan 2013

TTK Prestige is a company with a strong brand recall for its products in the domestic appliances industry. Though top and bottomline have fared well in the December quarter of 2012, it has been facing a whole lot of pressure on the margin front. The management sees the short term future to be challenging but we believe its long term prospects remain intact.

The results of TTK Prestige for the quarter ended December 2013 have been rather good. Its topline and the bottomline witnessed a growth of 30.57% and 27.57% respectively. Of course, there has been some pressure on the margins front owing to higher raw material prices for the company.

Particulars (Rs Cr)Dec-12Dec-13Growth %
Net Sales/Income from operations 437.13 334.33   30.75
EBITDA 59.89 50.87 17.73
P/L After Tax from Ordinary Activities  44.10   34.57  27.57
PAT  44.10 34.57   27.57
Margins % Chg BPS
EBITDA Margin  13.70   15.22 -151
Net Profit Margin  10.09   10.34 -25
According to the company’s management, the environment remains tough and they have been facing some road blocks in the state of Tamil Nadu. The state is running through a severe power shortage and that is why the sales of induction cook tops in this state have not picked up. Sales from the other parts of the country have compensated for the fall in demand in Tamil Nadu. The average realisation per pressure cooker for this quarter stood at Rs 1080, and is up by about 8% - 9% in the last four quarters. This higher realisation is mainly due the price hikes effected by the company. Also, induction based pressure cookers have a higher realization and this too has contributed to some extent to the above factor.

Segment Wise Results

Cookers have remained the main topline driver contributing to more than 35% of its sales. This is up by a good 170 basis points on a YoY basis. The Appliances segment has been the highest contributor bringing in more than 44% of its overall sales. This too is up by a stupendous 320 basis points on a YoY basis.

Sales Break-UpDec-12Dec-13Growth %
Cookers 158 115 37.39
Cookware 76 74 2.7
Appliances 199 141 41.13
Others 12 10 20
Total 445 340 30.88
At the start of the financial year the company had suggested that its topline is likely to grow by 25% this year. But in the first 9 months growth has been at 23.75% marginally down from the guidance that was provided.

The company is not looking at scaling down its aggressive spending on the advertisement and sales promotion front and this is likely to keep its EBITDA margins under pressure. However, it is more focused on the long term rather than looking at short term margins. The stock has reacted negatively to the falling margins and was down by more than 6% yesterday. The company is likely to face some headwinds in the shorter term but its long term prospects remain intact.

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