TTK Prestige Ltd Result Update: Q3 FY 12 C.M.P: Rs. 2373.00 Target Price: Rs. 2681.00 Date: Jan 23 rd, 2012 BUY Stock Data: Sector: Consumer Durables Face Value Rs. 10.00 52 wk. High/Low (Rs.) 3200.00/1376.05 Volume (2 wk. Avg.) 29781 BSE Code 517506 Market Cap (Rs.In mn) 26862.36 Share Holding Pattern 1 Year Comparative Graph SYNOPSIS TTK Prestige Limited, has emerged as India s largest kitchen appliances company catering to the needs of home makers in the country. During the quarter ended, the robust growth of revenue is increased by 41.40% Rs.3343.30 million. TTK Prestige Limited exports its products to USA, Europe, South Africa, Kenya, Australia, Singapore, Middle East, Sri Lanka and many other countries. The company s Debt of Rs.900 million as on Dec 31 st, 2011. BSE SENSEX BSE SENSEX Company s Project capex spent during the year is around 140 crores. Net Sales and PAT of the company are expected to grow at a CAGR of 39% and 45% over 2010 to 2013E respectively. Years Net sales EBITDA Net Profit EPS P/E FY 11 7635.70 1253.70 837.50 73.98 32.07 FY 12E 11484.11 1909.35 1238.02 109.37 21.70 FY 13E 13780.93 2270.74 1479.85 130.73 18.15 1
Peer Group Comparison Name of the company CMP(Rs.) Market Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%) TTK Prestige 2373.00 26862.36 97.38 24.37 14.19 125.00 Hawkins Cookers 1425.00 7535.10 60.98 23.37 16.35 400.00 Bajaj Electricals 170.85 17133.20 13.46 12.69 2.83 140.00 Panasonic Home Apps 99.00 848.40 0.00-4.34 10.00 Investment Highlights Q3 FY12 Results Update TTK Prestige has posted a net profit of Rs 345.7 million for the quarter ended December 31, 2011 as compared to Rs 292.9 million for the quarter ended December 31, 2010, representing an increase of 18.03%. Net sales surged by 41.40% to Rs.3343.30 million from Rs.2364.50 million as compared to same quarter last year. Total income has increased from Rs 2376.10 million for the quarter ended December 31, 2010 to Rs 3356.00 million for the quarter ended December 31, 2011, representing increase of 41.40%. The EPS is stood at Rs.30.54 for the quarter ended Dec 2011. Quarterly Results - Standalone (Rs in mn) As At Dec-11 Dec-10 %change Net sales 3343.30 2364.50 41.40 PAT 345.70 292.90 18.03 Basic EPS 30.54 25.87 18.03 2
Break up of Expenditure Segment wise Revenue Particular Q3 FY12 Q3 FY11 Kitchen Appliances 3343.3 2364.5 Property & Investment 2 1.9 Total 3345.3 2366.4 3
Capex plan Uttaranchal capex plan for pressure cookers completed Coimbatore facility largely completed Expansion in SS cooker capacity in hosur completed Gujarat project will be taken up in FY 2012-13 Project capex spent during the year is around 140 crores Balance around Rs. 85 crores will be spent before 31.3.2013 Company Profile TTK Prestige Limited is part of TTK Group. Over the past five decades TTK Prestige Limited, has emerged as India s largest kitchen appliances company catering to the needs of home makers in the country. Every Prestige brand product is built on the pillars of safety, innovation, durability and trust, making the brand the first choice in millions of homes. They always begin by understanding the needs and requirements of customer and then they design and deliver innovative products. TTK Prestige Limited is one of the world s largest manufacturers of Pressure Cookers and it has been forefront in introducing several innovations like Gasket Release System (GRS), Gasket Offset Device (GOD) and Double Locking System, all firsts in India. TTK Prestige Limited is also the first Kitchenware Company in India to receive the ISO 9001 Certification and the PED/CE Certification by TUV, Germany. Prestige has been awarded with Selected Super Brand validated by Consumers and also it is the most preferred brand in Kitchenware segment. TTK Prestige Limited exports its products to USA, Europe, South Africa, Kenya, Australia, Singapore, Middle East, Sri Lanka and many other countries. Products 4
manufactured by TTK Prestige Limited meets every relevant global standard such as CE, GS, UL etc. Products Today, TTK Prestige Limited has the widest product portfolio covering all aspects of the Kitchen making it the only brand to offer TOTAL KITCHEN SOLUTIONS to the customer. 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. 5
Financials Results 12 Months Ended Profit & Loss Account (Standalone) Value(Rs.in.mn) FY10 FY11 FY12E FY13E Description 12m 12m 12m 12m Net Sales 5079.40 7635.70 11484.11 13780.93 Other Income 11.40 43.00 47.28 52.01 Total Income 5090.80 7678.70 11531.39 13832.94 Expenditure -4329.20-6425.00-9622.04-11562.20 Operating Profit 761.60 1253.70 1909.35 2270.74 Interest -11.40-7.60-69.26-77.58 Gross profit 750.20 1246.10 1840.08 2193.16 Depreciation -35.90-42.60-64.63-73.03 Profit Before Tax 714.30 1203.50 1775.45 2120.13 Tax -227.80-366.00-537.44-640.28 Profit After Tax 486.50 837.50 1238.02 1479.85 Extraordinary items 37.90 0.00 0.00 0.00 Net profit 524.40 837.50 1238.02 1479.85 Equity capital 113.20 113.20 113.20 113.20 Reserves 1106.90 1780.00 3018.02 4497.87 Face value 10.00 10.00 10.00 10.00 EPS 46.33 73.98 109.37 130.73 6
Quarterly Ended Profit & Loss Account (Standalone) Value(Rs.in.mn) 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12E Description 3m 3m 3m 3m Net sales 2331.40 3034.80 3343.30 2741.51 Other income 7.50 9.90 12.70 13.08 Total Income 2338.90 3044.70 3356.00 2754.59 Expenditure -1960.10-2536.80-2815.30-2327.54 Operating profit 378.80 507.90 540.70 427.05 Interest -4.90-12.60-25.40-29.46 Gross profit 373.90 495.30 515.30 397.58 Depreciation -10.70-12.90-19.30-21.23 Profit Before Tax 363.20 482.40 496.00 376.35 Tax -109.80-145.30-150.30-114.04 Profit After Tax 253.40 337.10 345.70 262.32 Extraordinary items 0.00 0.00 0.00 0.00 Net profit 253.40 337.10 345.70 262.32 Equity capital 113.20 113.20 113.20 113.20 Face value 10.00 10.00 10.00 10.00 EPS 22.39 29.78 30.54 23.17 7
Key Ratios Particulars FY10 FY11 FY12E FY13E No. of Shares(In Million) 11.32 11.32 11.32 11.32 EBITDA Margin (%) 14.99% 16.42% 16.63% 16.48% PBT Margin (%) 14.06% 15.76% 15.46% 15.38% PAT Margin (%) 9.58% 10.97% 10.78% 10.74% P/E Ratio (x) 51.22 32.07 21.70 18.15 ROE (%) 39.87% 44.24% 39.54% 32.09% ROCE (%) 63.90% 67.67% 62.55% 50.54% Debt Equity Ratio 0.02 0.01 0.01 0.01 EV/EBITDA (x) 35.27 21.43 14.07 11.83 Book Value (Rs.) 107.78 167.24 276.61 407.34 P/BV 22.02 14.19 8.58 5.83 8
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Outlook and Conclusion At the current market price of Rs.2373.00, the stock is trading at 21.70 x FY12E and 18.15 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.109.37 and Rs.130.73 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 39% and 45% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 14.07 x for FY12E and 11.83 x for FY13E. Price to Book Value of the stock is expected to be at 8.58 x and 5.83 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs.2681.00 for Medium term investment. Industry Overview Consumer durables are the products whose life expectancy is at least 3 years. These products are hard goods that cannot be used up at once. The consumer durables sector can be segmented into consumer electronics, such as, VCD/DVD, home theatre, music players, color televisions (CTVs), etc. and white goods, such as, dish washers, air conditioners, water heaters, washing machines, refrigerators, etc. With the increase in income levels, easy availability of finance, increase in consumer awareness, and introduction of new models, the demand for consumer durables has increased significantly. Products like washing machines, air conditioners, microwave ovens, color televisions (CTVs) are no longer considered luxury items. However, there are still very few players in categories like vacuum cleaners, and dishwashers. 11
Consumer durables sector is characterized by the emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in consumer durables sector is 65%. MNC's major target is the growing middle class of India. MNCs offer superior technology to the consumers, whereas the Indian companies compete on the basis of firm grasp of the local market, their well-acknowledged brands, and hold over wide distribution network. However, the penetration level of the consumer durables is still low in India. An important factor behind low penetration is poor government spending on infrastructure. For example, the government spending is very less on electrification programs in rural areas. This factor discourages the consumer durables companies to market their products in rural areas. Growth rates The sectors that are projected to achieve excellent growth rates of more than 20 per cent in terms of quantity produced are: air-conditioners (25 per cent), split airconditioners (60 per cent), frost-free refrigerators (54 per cent), washing machines (20 per cent), fully automatic washing machines (35 per cent), microwave ovens (35 per cent), high-end flat panel TV (100 per cent), LCD TV (110 per cent), plasma TV (100 per cent) VCD/MP3 (20 per cent), DVDs (25 per cent), DVDs-organized (25 per cent). There is a need to remove some anomalies affecting the growth of the industry, the survey pointed out. Consumer electronics manufacturers were of the opinion that in the era of digital convergence, differential taxation policies for IT and consumer electronics products create distortions and anomalous situations. Sector outlook There has been strong competition between the major MNCs like Samsung, LG, and Sony. LG Electronics India Ltd. has announced its extension plan in 2006. The company is going to invest $250 million in India by 2011 and is planning to establish 12
a manufacturing facility in Pune. TCL Corporation is also planning to establish a $22 million manufacturing facility in India. The Indian companies like Videocon Industries and Onida are also planning to expand. Videocon has acquired Electrolux brand in India. Also, with the acquisition of Thomson Displays by Videocon in Poland, China, and Mexico, the company is marking its international presence. According to isuppli Corporation (Applied Market Intelligence), country's fiscal policy has encouraged Indian consumer electronic industry. The reduction on import duty in the year 2005-06 has benefited many companies, such as Samsung, LG, and Sony. These companies import their premium end products from manufacturing facilities that are located outside India. Indian consumers are now replacing their existing appliances with frost-free refrigerators, split air conditioners, fully automatic washing machines, and color televisions (CTVs), which are boosting the sales in these categories. Some companies like Samsung Electronics Co. Ltd. and LG Electronics India Ltd. are now focusing on rural areas also. These companies are introducing gift schemes and providing easy finance to capture the consumer base in rural areas. 13
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. 14
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