ICICI Direct has given Buy recommendation for TTK Prestige with a target price of Rs. 9760 in its research report issued on May 26, 2021

ICICI Direct’s research report on TTK Prestige

With renewed interest in cookware & kitchen appliances demand, TTK continued to report a solid operational performance in Q4FY21 with strong beat across all parameters. Revenue for the quarter grew 44.7% YoY (twoyear CAGR: 6.4%) to Rs 554.9 crore (I-direct estimate: Rs 518.2 crore), partly attributable to favourable base (revenue fell 21%). Domestic sales grew 41.5% YoY to Rs 533 crore whereas exports sharply increased 218% YoY to Rs 21.9 crore. On segmental front, cooker (31% of sales), cookware (16% of sales), appliances (48% of sales) categories posted strong revenue growth of 49%, 67%, 34% YoY, respectively. Despite rise in RM prices, gross margins improved 210 bps YoY (410 bps QoQ) to 45.6%, largely due to price hikes and better channel mix (offline channels performed better than online). Owing to positive operating leverage (employee, other expenses as percentage of sales down 245 bps, 480 bps YoY, respectively) TTK reported one of its all-time high EBTDA margins of 18.5% (up 930 bps YoY, 110 bps QoQ). On the back of a healthy operational performance, exceptional gain of Rs 11.9 crore (reversal of provision for export obligation made in previous years), ensuing PAT came in at Rs 82.4 crore vs. Rs 20.9 crore in Q4FY20.

Outlook

We expect TTK to sustain its revenue growth trajectory and build in revenue and earnings CAGR of 15%, 14%, respectively in FY21-23E. We reiterate our BUY rating on the stock with a target price of Rs 9760 (43x FY23E EPS, earlier TP: Rs 8030).