TTK Prestige - Revenue affected by GST implementation: CRISIL

CRISIL has come out with its report on TTK Prestige. The research firm has assigned a fair value of Rs 6054 per share. However, retained fundamental grade of 5/5 to the company.

October 10, 2017 / 18:05 IST

Amul satellite dairy in Khatraj village, Gujarat. Representative Image (REUTERS/Amit Dave)

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CRISIL's research report on TTK Prestige
TTK Prestige Ltd’s Q1FY18 results were below CRISIL Research’s estimates. Standalone revenue (before netting off dealer discounts and excise duty) grew a tepid 4% y-o-y to Rs. 3,772 mn owing to inventory destocking by dealers in June, prior to the implementation of the Goods and Services Tax (GST). Following muted revenue growth, EBITDA margin contracted 13 bps y-o-y. In Q1FY18, TTK generated a one-time net income of Rs. 1,290 mn through the sale of its share in the real estate property in Dooravani Nagar, Bengaluru, which boosted PAT. Adjusted for one-time income, PAT increased 3.9% y-o-y to Rs. 276 mn. According to management, barring June, demand has been improving since Q4FY17. In July also, TTK witnessed volume growth across product categories, as the company and dealers started adjusting to the GST system. Going forward, TTK is likely to benefit from: (1) the launch of its new brand, Judge, mainly addressing the rural market; and (2) introduction of new products (new categories and variants of existing products). We maintain our fundamental grade of 5/5.

We introduce consolidated financials, including Horwood’s, in this quarter. Accordingly, we revise our estimates for FY18-19. However, we maintain our discounted cash flow (DCF)-based fair value is Rs. 6,054. At the current market price of Rs. 6,343, our valuation grade is 3/5.

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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