CRISIL assigns fair value of Rs 2,392 to TTK Prestige

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CRISIL assigns fair value of Rs 2,392 to TTK Prestige

CRISIL Research has come out with its report on TTK Prestige. The research firm has maintained the fundamental grade of 5/5 to the company in its January 12, 2012 report.

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TTK Prestige BSE | NSE 31/05/12 Are Mutual Funds betting on TTK Prestige?

CRISIL Research has come out with its report on TTK Prestige . The research firm has maintained the fundamental grade of 5/5 to the company in its January 12, 2012 report.

TTK Prestige Ltd's (TTK's) Q3FY12 results were in line with CRISIL Research's expectations. Revenue growth at ~41% y-o-y and ~10% q-o-q was higher than our expectations, demonstrating continued strength in consumer demand. EBITDA margin declined by ~200 bps and ~60 bps on annual and sequential basis, respectively, and was slightly below our estimates. We believe that decline in margins is primarily due to rupee depreciation as the company imports ~60% of its kitchen appliances from China. PAT grew by ~18% y-o-y to Rs 346 mn. We remain positive on TTK's growth prospects given strong consumer demand and may revise our revenue numbers upwards. However, margin estimates may be lowered, which would mean that our PAT estimates for FY12 would broadly remain the same. We will provide further clarity post our management call. We maintain the fundamental grade of 5/5.

Q3FY12 result analysis
• Revenues grew by ~41% y-o-y and ~10% q-o-q to Rs 3.3 bn demonstrating continued strength in consumer demand. We will have further visibility on the product segment's performance post our management call.

• EBITDA grew ~25% y-o-y and ~6% q-o-q to Rs 528 mn, however margin declined by ~200 bps and ~60 bps on annual and sequential basis respectively. We anticipate that it was largely due to rupee depreciation impact on its cost of imported products. TTK's raw material costs have gone up by ~200 bps y-o-y and ~90 bps q-o-q.

• PAT grew by 18% y-o-y and ~3% q-o-q to Rs 346 mn driven by top line growth. PAT margin declined by ~205 bps y-o-y and 77 bps q-o-q largely due to contraction in EBITDA margin.

Remain positive on growth; margin estimates under review
We remain positive on the company's growth prospects and believe it is well placed to post higher revenue than our estimate of Rs 10.5 bn in FY12. However, margins have come below our expectations and we may revise those estimates after having further clarity with the management. We expect EBITDA of Rs 1.7 bn and EBITDA margin of 15.9% in FY12.

Valuations: Current market price is aligned
We continue to value TTK based on the discounted cash flow method and maintain our fair value at Rs 2,392 per share. At the current market price of Rs 2,321, the valuation grade is 3/5.

To read the full report click on the attachment

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

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