Jun 08, 2012, 03.22 PM IST
Kitchen appliance major TTK Prestige is confident of achieving 25% sales and revenues growth in FY13. TT Jagannathan, chairman, TTK Prestige told CNBC-TV18 its pressure cooker segment which is normally a laggard witnessed impressive growth this year.
TT Jagannathan, chairman, TTK Prestige told CNBC-TV18 its pressure cooker segment which is normally a laggard witnessed impressive growth this year.
Its margins took a hit in the fourth quarter due to depreciating rupee. "From 2010-11 to 2011-12 the EBITDA margin dropped from 15.76% to 14.96%. The drop was almost 1% all because of the dollar rupee equation and the last quarter was same," he elaborated.
However, the company is hopeful of maintaining margins if rupee does not weaken further, he added.
Below is the edited transcript of Jagannathan’s interview with CNBC-TV18. Also watch the accompanying video.
Q: You closed up an extremely strong FY12. What kind of early indications do you have in terms of the growth that you could clock in the first half of FY13 even both in terms of revenues and indeed on profits?
A: We are looking at about 25% growth both in top line and in terms of profit for this year and for the half year.
Q: Could you just break that up in terms of the categories you think will push the hardest and whether or not margins as well will remain strong?
A: As a matter of fact we are very surprised to see that all categories are growing very robustly including the pressure cooker category, which normally is the laggard and grows the slowest. But this year we have seen very good growth even in pressure cookers. We do believe that we will be able to maintain margins provided the rupee does not depreciate dramatically do the dollar.
Q: Was that the primary reason why margins got pulled down by the 4th quarter because for the full year they are holding up but by the 4th quarter there was a bit of a slip?
A: Even for the full year there was a slip. From 2010-11 to 2011-12 the EBITDA margin dropped from 15.76% to 14.96%. The drop was almost 1% because of the dollar rupee equation and the last quarter was same.
Q: How do you plan to counter that? Have you now introduced any hedging policies, how will you insulate yourself to the wiggeries of the currency?
A: No it’s not close to hedging, we do increases prices if the dollar appreciates to the rupee. We don’t hedge, we have been advised not to hedge. As long as the depreciation is slow and 1-2% a quarter it should not affect the bottom-line. Only when its dramatic like 10% a quarter then there is a lag between the price increase and the cost increase.
Q: Is it just a currency problem because the market is a bit concerned by the increasing exposure you have to the appliances segment which is a slightly lower margin business. Is that as well crimping margin performance overall?
A: It will because there is a lower margin appliances and appliance business is growing well. But if you focus on the bottom-line and look at return on capital employed (ROC) that’s improving because of profits on appliances.
Q: At this point along with the percentage growth that you set out is there any clarity or do you have a target in terms of what that should translate into on core earnings per share by the end of FY13?
A: We believe we should have about Rs 140 per share earnings.
TTK Prestige stock price
On December 04, 2013, TTK Prestige closed at Rs 3561.15, up Rs 33.05, or 0.94 percent. The 52-week high of the share was Rs 3899.00 and the 52-week low was Rs 2870.00.
The company's trailing 12-month (TTM) EPS was at Rs 110.14 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 32.33. The latest book value of the company is Rs 339.96 per share. At current value, the price-to-book value of the company is 10.48.
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