Buy TTK Prestige; target of Rs 6271: Cholamandalam securities

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Cholamandalam securities' research report on TTK Prestige

1QFY21 consolidated revenues contracted by 51.0% YoY, to ₹2.2bn while EBITDA margins declined to 2.6%. The PAT for the quarter declined by 94.0% YoY to ₹0.2mn. Among categories, cookers segment was impacted most with revenue declining by 59% YoY to ₹580mn. Kitchen appliances, cookware categories fell 45% YoY to ₹1.1bn, ₹350 mn, respectively. On the back of change in product mix, gross margins fell 200 bps YoY to 40.5%. On the distribution channel front, the management indicated that ~60% of distribution channels are currently operational as large format stores and mall remained shut. General trade and the company’s own retail outlet revenues during 1QFY21 grew in double digits while e-commerce was the best performing channel.

Outlook

We expect the strong momentum seen in online sales coupled with recovery in rural demand and softening RM prices to drive earnings going forward. We remain optimistic on the long term growth prospects of the company. At current market price the stock is trading at 32.6x its FY22 earnings, we maintain our Buy rating on the stock with a revised target price of 6,271.

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