17 Jan 2014
3QFY14 Results Update |Sector: Real Estate
TTK Prestige
CMP: INR3500
Disappointing quarter; Induction cook‐top revenues nosedive;
Not Rated
TTK sales stood at INR3.69b in 3QFY14 vs INR4.37b, down 15%. Induction
cook‐top and bundled products sales dropped by 55% during this quarter
from INR1.48b to INR600m. Ex‐induction range; revenues grew by 7% from
INR2.78bm to INR2.98b during the quarter.
Management maintained that the inventory in induction remain at elevated
levels . It cautioned that if cylinder cap is increased from 9 to 12, induction
cook top sales may be impacted further.
South markets continued to be under pressure due to poor power situation,
poor festive demand and political problems in AP. Non South Markets which
were resilient so far; also de‐grew this quarter by 18% largely led by
induction de‐growth (65% de growth)
Exports declined by 31% to INR115m from INR165m. Mgmt hinted that they
expect exports to revive significantly in FY15E with improved demand for
microwave pressure cooker from Japan .
Margins stood at 12.5% in 3QFY14 as compared to 14.3% in 3QFY13, down
180bps. While gross margins have expanded by around 80bps, lack of
operating leverage and higher ad spends impacted margins. Gross margins
expanded primarily due to improvement in product mix in favour of
pressure cooker and cookware and higher decline in lower margins
appliances segment.
Consequently PAT stood at INR 295mn as compared to INR 441mn, down
33% YoY.
The company has deferred its plans to launch water purifier to 1QFY15 as
against earlier guidance of 3QFY14 . The management believes that water
purifier segment has immense potential and scalability to become as large
as induction cooktops over the long term.
It has opened 17 new Prestige smart kitchen (PSK) stores taking the total to
509 stores. It plans to add another 75‐100 PSKs in FY15.
Management expects Q4FY14 to witness flat growth as against de‐growth
witnessed this quarter driven.
FY15 is expected to witness strong growth led by a favorable base,
improving power situation in South India (power grid connectivity in South
markets expected in FY15), higher exports and newer product launches like
water purifier.
Completed major capex; is now looking at acquiring a brand in Europe to
boost exports. Net borrowing at end of the quarter stood at INR270m.
At CMP of INR3,500, the stock is trading at 29x FY13 EPS of INR 117.5 and
30x FY14E Consensus EPS of INR 114. Not Rated.
1
 Motilal Oswal Financial Services
TTK Prestige
Segment wise quarterly performance
Segment wise performance for 9MFY14
17 Jan 2014
2
 Motilal Oswal Financial Services
TTK Prestige
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TTK Prestige
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