Feb 14, 2017 06:04 PM IST | Source: Moneycontrol.com

Sell TTK Prestige; target of Rs 4020: Axis Direct

Axis Direct is bearish on TTK Prestige has recommended sell rating on the stock with a target price of Rs 4020 in its research report dated February 07, 2017.

Sell TTK Prestige; target of Rs 4020: Axis Direct

Axis Direct's research report on TTK Prestige

Q3FY17 sales at Rs 4.2 bn, down 2% YoY, was below our/consensus expectation, as demonetization hit demand across all product categories in November, which is the peak festive/wedding season. While October/Dec posted strong sales growth at 25%/17% YoY, November saw a steep decline. Gross margin contracted 120 bps YoY on high fixed costs, hardening of metal prices, and product-mix effect. Core EBITDA margin declined 190 bps to 11.3% (estimate: 12%). PAT at Rs 297 mn, down 20% YoY, below our estimate of Rs 329 mn.

Outlook

We trim FY17 sales growth to 4% (13% earlier) to factor Q3 performance; FY18 unchanged. We bring TTK’s target multiple in line with industry peers to 30x given TTK’s market-leading position and footprint; Maintain SELL with a revised TP of Rs 4,020 (30x FY18E).

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