Gladiator Stocks - TTK Prestige: ICICI Direct

According to ICICI Direct, Buy TTK Prestige in the range of Rs 5900.00–6020.00 for target price of Rs 6970.00 with a stop loss of Rs 5490.00. Time Frame: Six months.

December 28, 2020 / 03:56 PM IST
 
 
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ICICI Direct's research report on TTK Prestige


Strategy


Buy TTK Prestige in the range of Rs 5900.00–6020.00 for target price of Rs 6970.00 with a stop loss of Rs 5490.00. Time Frame: Six months.


Technical View


The consumption stocks remain in strong up trend with outperformance from the midcap consumption space. Technically we are constructive on TTK Prestige which we expect to witness a catch up activity and outperform on the basis of following observations. The stock has generated a breakout above last four months triangular consolidation signals resumption of the primary uptrend. The share price has already taken 14 weeks to retrace just 80% of the previous six weeks rally (Rs 5020-6675). Shallow retracement of the previous up move (5020-6575) and a higher base at 52 weeks EMA (currently at 5722) highlights robust price structure. The breakout from the triangular consolidation is supported by strong volume of more than the four times the 200 days average volume of 7700 share per day highlighting larger participation in the direction of trend. We expect the stock to resume up move after recent breather and head towards Rs 6970 levels as it is the 80% retracement of the entire CY 2019-2020 decline (Rs 7730-3901) placed at 6970.


Fundamental View


TTK Prestige is India’s leading branded kitchenware and appliances player commanding significant market share. Post relaxation in lockdown, green shoots were visible with renewed customer interest in kitchen appliances, cookers segment as most people preferred home cooked food. The management remained upbeat on the demand outlook with trajectory across categories sustaining double digit topline growth. Festive season demand has been quite strong (~15% growth in October) and growth rate continues to be healthy in November as well. In a bid to cater to the healthy domestic and export demand, company is adding incremental manufacturing lines (for cooker and cookware) which would translate into 15-20% increase in capacity. The company’s new capacity is expected to be operational from Q1FY22E onwards With supply side issues mostly resolved and encouraging festive trends, we expect revenue trajectory to improve materially in H2FY21E. We build in revenue and earnings CAGR of 9% and 14%, respectively, in FY20-23E, with higher RoIC of ~30% in FY23E. TTKP continues to be virtually debt free and has substantial free cash worth Rs ~470 crore.


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first published: Dec 28, 2020 03:56 pm

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