TTK Prestige Ltd, known for its kitchen appliances and cookware, is finding it hard to stay profitable due to increased competition, especially for its basic products. Consumers are also spending more on other items, making it tough for the company to increase sales.
Given this situation, it’s not surprising that their revenue only grew by 2% year-on-year to ₹623 crore in the March quarter (Q4FY24).
While online sales show some promise, traditional store sales are struggling. Even strong sales promotions didn’t help much. Although TTK Prestige improved production efficiency, their overall operating leverage suffered. As a result, their Q4 earnings before interest, taxes, depreciation, and amortization (Ebitda) margin dropped by 74 basis points (bps) to 12.4%.
Following these results, Yes Securities lowered their growth forecast for TTK Prestige’s revenue to a 9.5% compound annual growth rate (CAGR) for FY24-26, down from the earlier 11% expectation. However, they remain “mildly positive” on the stock, noting that the company has performed relatively better than its competitors in this tough market and is likely to bounce back once demand improves.
Despite the stiff competition, TTK Prestige has managed to keep its market share in key areas. For the entire year, their Ebitda margin fell by 157 bps to 11.3% in FY24, with revenues dropping by 3.6% to ₹2,678 crore. However, there was a revival in the second half of FY24 with a 3.6% revenue growth year-on-year, indicating higher growth in FY25, according to ICICI Securities.
The revamp of their ‘Judge’ brand, aimed at the mass market, might offer some relief in FY25. However, weak demand, especially in the mid-range segment, remains a concern.
TTK Prestige’s multi-brand strategy is still being developed. The company expects demand to improve in the coming quarters, citing a shift in consumer spending towards kitchenware and the positive impact of strong real estate sales on kitchen appliance demand. They anticipate mid-teen growth due to this shift in demand.
Moreover, they expect exports to improve in FY25, particularly targeting developed European economies to diversify their export portfolio. This effort is already showing promise, with TTK Prestige adding two new European clients in Q4FY24.
Looking ahead, investments in modernizing manufacturing plants might lead to long-term savings. The company’s ability to adapt and innovate will be crucial for future success.
For now, investors may wait for clear signs of improvement in demand before investing. Currently, the shares trade at 34 times the one-year forward price-to-earnings multiple, according to Bloomberg data, and are down 16% from their 52-week high of ₹832.70 seen on September 6.
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