HDFC Securities' research report on TTK Prestige
TTK Prestige’s Q4FY23 print disappointed on all counts with revenue/EBITDA/PAT declining by 13/25/25% YoY respectively. Domestic revenue fell 11% YoY on account of (1) demand softness due to an inflationary environment; (2) consumer wallet share moving away from kitchen appliances; and (3) pricing-led competitive intensity (more so in the mid-economy segment). Moreover, export revenue declined by 50% due to weak global cues. Demand softness was seen across categories with cookers/cookware/appliances revenues falling 20/13/8%. Gross margins contracted by 210bps YoY. In Q4, TTK took a write-off on its obsolete inventory (115bps impact on GM; c.INR600mn).
Outlook
EBITDAM contracted by 230bps despite lower A&P spending. With demand expected to remain soft in the near term and a high base (H1FY23 21% YoY growth), we expect demand recovery only in H2FY24 for TTK and cut our FY24/25 EPS by 5% each. We value the stock on 30x Mar-25 EPS to derive a TP of INR 725. Maintain REDUCE.
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