CMP 3475.05

Target Price 3822.00

ISIN: INE690A01010

JULY 15th

2014

TTK PRESTIGE LIMITED

Result Update (PARENT BASIS): Q1 FY15

BUYBUYBUYBUY

Index Details

Stock Data

Sector Houseware

BSE Code 517506

Face Value 10.00

52wk. High / Low (Rs.) 4357.95/2700.00

Volume (2wk. Avg. Q. in Mn) 2666

Market Cap (Rs. in mn.) 40449.58

Annual Estimated Results (A*: Actual / E*: Estimated)

YEARS FY14A FY15E FY16E

Net Sales 12938.30 14490.90 15939.99

EBITDA 1681.00 1873.31 2088.70

Net Profit 1117.90 1223.83 1328.53

EPS 96.04 105.14 114.13

P/E 36.18 33.05 30.45

Shareholding Pattern (%)

1 Year Comparative Graph

TTK PRESTIGE LTD BSE SENSEX

SYNOPSIS

TTK Prestige Ltd Company is the leading provider

of kitchen appliances in the country and has a

varied product portfolio ranging from pressure

cookers, non-stick cookware, and gas stoves to

electrical appliances.

During Q1 FY15, Net sales of the company rose by

9.81% to Rs. 3363.90 mn from Rs. 3063.30 mn over

the corresponding quarter in the previous year.

During the quarter, EBIDTA dropped by just 1.79%

to Rs. 423.30 mn from Rs. 431.00 mn in Q1 FY14.

EBIDTA margin stood at 12.3% compared to

proceeding year annual average of 12.7%.

Net Profit after Tax for the quarter was Rs. 258.10

mn as compared to 257.90 mn in Q1 FY14.

In Q1 FY15, EPS stood at Rs. 22.17(PY Q1 Rs. 22.74)

on expanded capital.

During the quarter, exports grew by 43% to Rs.

163.5 mn from Rs. 114.6 mn in Q1 FY14.

For the quarter, net addition to prestige smart

kitchen network was 10 taking the total to 546.

The net borrowings of the company as on June 30,

2014 was nil.

The Company has entered new category water filter

with Swiss technology initial launch well received

by the market in the quarter.

TTK Prestige is trying to drive export business to

hedge against any drop in expected domestic

demand.

Net Sales of the company are expected to grow at a

CAGR of 5% over 2013 to 2016E respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

TTK Prestige Ltd. 3475.05 40449.58 96.04 36.18 6.94 200.00

La Opala RG Ltd. 1013.00 10735.30 28.27 35.83 10.32 50.00

Hawkins Cooker Ltd. 2902.35 15347.10 72.40 40.09 16.50 600.00

Borosil Glass Works Ltd. 1641.60 4934.60 123.59 13.28 0.74 200.00

ANAYSIS & RECOMMENDATION- ‘BUY’

During Q1 FY15, Net sales of the company rose by 9.81% to Rs. 3363.90 mn from Rs. 3063.30 mn over the

corresponding quarter in the previous year. EBIDTA dropped by just 1.79% from Rs. 431.00 mn to Rs. 423.30 mn.

EBIDTA margin stood at 12.3% compared to proceeding year annual average of 12.7%. Net Profit after Tax was

Rs. 258.10 mn as compared to 257.90 mn. EPS stood at Rs. 22.17(PY Q1 Rs. 22.74) on expanded capital. During

the quarter depreciation charge is high due to changes brought by Companies Act, 2013.

During the quarter, exports grew by 43% to Rs. 163.5 mn from Rs. 114.6 mn in Q1 FY14. For the quarter, net

addition to prestige smart kitchen network was 10 taking the total to 546. The net borrowings of the company as

on June 30, 2014 was nil. The Company has entered new category water filter with Swiss technology initial launch

well received by the market in the quarter. The Company’s marketing inputs and new models, besides

improvements in key southern markets, enabled growth in domestic market especially the southern markets.

Company is focusing on new product launches and brand promotion to get back into growth mode. TTK is trying

to drive export business to hedge against any drop in expected domestic demand. Better monsoon and a stable

new government with development focus can facilitate growth. Thus we recommend ‘BUY’ for the scrip with a

target price of Rs. 3822.00.

QUARTERLY HIGHLIGHTS (PARENT BASIS)

Results updates- Q1 FY15,

Months Jun-14 Jun-13 % Change

Net Sales 3363.90 3063.30 9.81

PAT 258.10 257.90 0.08

EPS 22.17 22.74 (2.50)

EBITDA 423.30 431.00 (1.79)

During the quarter, company’s net profit stood at Rs. 258.10 million as compared to Rs. 257.90 million in the

corresponding quarter ending of previous year. Revenue for the quarter rose by 9.81% to Rs. 3363.90 million

from Rs. 3063.30 million, when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 22.17 a share during the quarter, registering 2.50% decrease over previous year period.

Profit before interest, depreciation and tax is Rs. 423.30 million as against Rs. 431.00 million in the

corresponding period of the previous year.

Break up of Expenditure

Break up of

Expenditure

In Rs. Millions

Q1 FY15 Q1 FY14 %

Change

Consumption of Raw

Materials 1045.40 992.80 5%

Depreciation and

Amortization 57.20 24.00 138%

Employees Benefit

Expenses 253.60 221.00 15%

Other Expenditure 844.90 702.50 20%

Purchase of Stock-in-

Trade 772.00 795.10 -3%

Latest Updates

• TTK Prestige has launched its latest product, a water purifier that only gives Pure and Vegetarian water. The

company has partnered with Lifestraw SA, a renowned Swiss company for providing a state-of-art

technology for the water purifier.

COMPANY PROFILE

TTK Prestige Limited is a part of the TTK Group. The company is the leading provider of kitchen appliances in the

country and has a varied product portfolio ranging from pressure cookers, non-stick cookware, and gas stoves to

electrical appliances and kitchen tools. The company also has a series of exclusive retail showrooms called

Prestige Smart Kitchens across the country.

The company has been at the forefront of innovation in the Kitchen segment and has been the fastest growing

company in the kitchen appliance space. The Prestige brand has been a consistent Super brand in the category

apart from several other awards received in the areas of retail, product design and company performance. The

company has 546 Prestige Smart Kitchen outlets in 240 towns.

The company presently has manufacturing set-ups in the states of Tamil Nadu, Uttarakhand, Gujarat and

Maharashtra and 28 sales branches located across the country to cater to the needs of specific markets. TTK

Prestige is the first kitchenware company in India to receive the ISO 9001 certification and the PED / CE

certification by TUV, Germany.

The product range includes Pressure Cookers, Non-Stick Cookware, Rice Cookers, OTG’s, Kitchen Hoods

(Chimneys), Hobs, LP Gas Stoves, Coffee Makers, Kettles, Sandwich Toasters and many other small electrical

appliances. TTK Prestige Limited also offers Modular Kitchen solutions with the widest range of options in terms

of design, choice of materials, accessories and hardware.

TTK Prestige Limited exports its products to USA, Europe, South Africa, Kenya, Australia, Singapore, Middle East,

Sri Lanka and many other countries. Products manufactured by TTK Prestige Limited meets every relevant global

standard such as CE, GS, UL, etc.

FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet as at March 31, 2013 -2016E

FY13A FY14A FY15E FY16E

EQUITY AND LIABILITIES:

Shareholders’ Funds:

Share Capital 113.55 116.50 116.50 116.50

Reserves and Surplus 3841.08 5736.60 6938.93 8187.94

a) Net worth 3954.63 5853.10 7055.43 8304.44

Non-Current Liabilities:

Long-term borrowings 9.59 4.30 4.04 3.72

Deferred Tax Liabilities [Net] 101.15 205.30 242.25 273.75

Other Long Term Liabilities 50.00 50.00 52.00 53.56

Long Term Provisions 78.21 41.20 43.67 45.86

b) Total Non Current liabilities 238.95 300.80 341.97 376.88

Current Liabilities:

Short-term borrowings 1135.45 253.80 187.81 157.76

Trade Payables 1233.30 1230.10 1267.00 1292.34

Other Current Liabilities 918.78 767.20 690.48 635.24

Short Term Provisions 426.06 313.00 281.70 292.97

c) Total Current Liabilities 3713.59 2564.10 2427.00 2378.31

Total Liabilities (a+b+c) 7907.17 8718.00 9824.39 11059.63

ASSETS:

Non-Current Assets:

Fixed Assets 1680.95 3396.10 4082.11 4816.89

Capital work-in-progress 1400.79 243.10 282.00 324.30

Non Current Investments 0.16 0.20 0.23 0.26

Long Term Loans and Advances 224.47 90.20 101.02 114.16

d) Total Non-Current Assets 3306.37 3729.60 4465.36 5255.61

Current Assets:

Current Investments 0.00 90.30 99.69 107.67

Inventories 2355.27 2668.10 2876.21 3106.31

Trade Receivables 1432.07 1491.10 1538.82 1628.47

Cash and Bank Balances 325.51 296.00 328.56 367.99

Short Term Loans and Advances 472.95 403.80 468.44 538.71

Other Current Assets 15.00 39.10 47.31 54.88

e) Total Current Assets 4600.80 4988.40 5359.03 5804.02

Total Assets (d+e) 7907.17 8718.00 9824.39 11059.63

Annual Profit & Loss Statement for the period of 2013 to 2016E

Value(Rs.in.mn) FY13A FY14A FY15E FY16E

Description 12m 12m 12m 12m

Net Sales 13584.80 12938.30 14490.90 15939.99

Other Income 47.30 78.80 76.44 80.26

Total Income 13632.10 13017.10 14567.33 16020.24

Expenditure -11547.60 -11336.10 -12694.02 -13931.55

Operating Profit 2084.50 1681.00 1873.31 2088.70

Interest -142.60 -85.40 -61.49 -67.64

Gross profit 1941.90 1595.60 1811.82 2021.06

Depreciation -89.90 -147.70 -199.40 -223.32

Exceptional Items 0.00 69.60 0.00 0.00

Profit Before Tax 1852.00 1517.50 1612.42 1797.74

Tax -521.10 -399.60 -388.59 -469.21

Net Profit 1330.90 1117.90 1223.83 1328.53

Equity capital 113.40 116.40 116.40 116.40

Reserves 3819.60 5715.10 6938.93 8187.94

Face value 10.00 10.00 10.00 10.00

EPS 117.36 96.04 105.14 114.13

Quarterly Profit & Loss Statement for the period of 31st Dec, 2013 to 30th Sep, 2014E

Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E

Description 3m 3m 3m 3m

Net sales 3694.40 2725.20 3363.90 3700.29

Other income 25.30 9.90 12.20 13.66

Total Income 3719.70 2735.10 3376.10 3713.95

Expenditure -3233.10 -2441.90 -2952.80 -3256.26

Operating profit 486.60 293.20 423.30 457.70

Interest -19.60 -13.30 -5.90 -5.43

Gross profit 467.00 279.90 417.40 452.27

Depreciation -46.20 -37.80 -57.20 -61.78

Exceptional Items -11.40 81.00 0.00 0.00

Profit Before Tax 409.40 323.10 360.20 390.49

Tax -114.50 -61.00 -102.10 -98.40

Net Profit 294.90 262.10 258.10 292.09

Equity capital 116.40 116.40 116.40 116.40

Face value 10.00 10.00 10.00 10.00

EPS 25.34 22.52 22.17 25.09

Ratio Analysis

Particulars FY13A FY14A FY15E FY16E

EPS (Rs.) 117.36 96.04 105.14 114.13

EBITDA Margin (%) 15.34% 12.99% 12.93% 13.10%

PBT Margin (%) 13.63% 11.73% 11.13% 11.28%

PAT Margin (%) 9.80% 8.64% 8.45% 8.33%

P/E Ratio (x) 29.61 36.18 33.05 30.45

ROE (%) 33.84% 19.17% 17.35% 16.00%

ROCE (%) 42.82% 30.03% 28.60% 27.31%

Debt Equity Ratio 0.29 0.04 0.03 0.02

EV/EBITDA (x) 2.95 3.10 2.76 2.51

Book Value (Rs.) 346.83 500.99 606.13 713.43

P/BV 10.02 6.94 5.73 4.87

Charts

OUTLOOK AND CONCLUSION

� At the current market price of Rs. 3475.05, the stock P/E ratio is at 33.05 x FY15E and 30.45 x FY16E

respectively.

� Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.105.14 and

Rs.114.13 respectively.

� Net Sales of the company are expected to grow at a CAGR of 5% over 2013 to 2016E respectively.

� On the basis of EV/EBITDA, the stock trades at 2.76 x for FY15E and 2.51 x for FY16E.

� Price to Book Value of the stock is expected to be at 5.73 x and 4.87 x respectively for FY15E and FY16E.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs. 3822.00 for Medium to Long term

investment.

INDUSTRY OVERVIEW

The market for Pressure Cookers is shared amongst organized national branded players, regional players and

unorganized players. From few years the share of the unorganized players has been gradually coming down due

to the change in customer preference and they are moving towards reliable branded players. The market for

organized brands is estimated at more than 60 % of the total market. The share of unorganized players is greater

for Non-stick cookware as compared to pressure cookers. For the rest of the product categories, the market

structure is fragmented and the share and the role of regional brands and unorganized players continue to be

significant.

In Appliance Category i.e. both Home and Kitchen, we can observe different categories. Both foreign and

domestic players are entering the category or they are expanding their range to cover a host of products in the

category. Regional brands are either supported by foreign players or being supported by private equity

investors. Some State Governments have started providing electrical appliances like mixer-grinders, fans, etc. at

free of cost to poor people or low income groups therefore a generation of demand for branded and upgraded

products could be expected in the long run.

Now, Indian kitchens and kitchenware are evolving from being purely functional to convenient and fashion-

driven. It is the gradual shift in lifestyle that is bringing about changes in the cooking and eating habits of the

Indian consumer. With increasing percentage of women entering the corporate world, and thus having limited

time, skill and even inclination to do much of home cooking, convenience is emerging as an important factor for

selecting kitchenware and people falling in this category may increase in the future therefore usage of different

kitchen appliances are expected to increase.

In India, the percentage of non-stick cookware is much less; however, it is expected to grow gradually. With the

growing interest towards healthy lifestyle and consequently healthy eating habits, there is an increasing growth

seen in utensils, which can be used to cook food without the use of oil and apart from that non-stick cookware is

also not good for health if it is used for long period hence it need to be replaced after certain period of time

therefore replacement market is expected to grow in the future.

Players like TTK Prestige felt that there was a growing need to reignite customer’s interest in the kitchenware

category, and considered innovating every single aspect to attract attention.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

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