Buy TTK Prestige; target of Rs 902: Geojit Financial Services

Geojit Financial Services research report on TTK Prestige

TTK Prestige Ltd. (TTK), the flagship company of the TTK group, mainly focuses on the kitchen appliances segment. The company operates five manufacturing plants and has strong distribution networks. We revised our target price to Rs. 902 (earlier Rs. 950) and maintain Buy rating considering the positive demand outlook. Revenue grew by 2% YoY in Q4FY24 (-8% YoY in exports & 3%YoY in domestic). Exports were impacted due to inflationary pressure. Gross margin improved by a 100bps, aided by reduction in input prices, however, operating margin declined by 70bps YoY to 12.4% due to higher other expenses. The recently acquired modular kitchen business (Ultrafresh) has recorded a sale of Rs. 31cr in FY24 (Rs. 23cr YoY) and has a total of 147 studios now vs 142 YoY. Decreasing inflation will improve discretionary spending, while strong growth in real estate and the GOI’s push for affordable housing are expected to improve demand for kitchen appliances, positive for TTK. Expect Revenue/EBITDA/PAT to grow at 9%/17%/17% CAGR over FY24-FY26E. We value TTK at 41x FY26E EPS.

Outlook

Barring short-term strains on demand and margins, the long-term outlook remains positive given lowering inflation, improvements in the real estate sector and a strong GoI focus on housing. This, along with TTK’s strong brand recall, augurs well for the company. The stock currently trades at ~38x 1Yr Fwd P/E. We value TTK at 41x FY26E EPS (5Yr avg=42x) to arrive at a revised target of Rs. 902, maintain BUY rating.