Shares of kitchenware and appliance maker TTK Prestige Ltd have gained nearly 34% from their 52-week low as seen on June 17 on the NSE. This has helped the stock recover losses in the first five months of calendar year 2022. Analysts said the recovery is also in view of the growth in the broader markets.
The stock is now at roughly the same level it was earlier this year.
According to data from Bloomberg, shares of TTK Prestige trade at 35 times estimated earnings for FY24. Some analysts believe that given the expected margin pressure in the September quarter (Q2FY23), the scope for a meaningful short-term upside appears limited. The company is carrying high cost inventory, the impact of which will be felt on margins this quarter.
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Additionally, Q2 revenue growth is expected to remain muted based on last year’s high. As such, the gains of commodity moderation are expected to be reflected from Q3 onwards.
TTK Prestige says high inflation has impacted consumption of entry-level products in the kitchen appliances segment. “However, the premium products market shows strong demand pull. Based on talks with the management of TTK Prestige, analysts at ICICI Securities Ltd said that early Diwali may see higher sales in September 2022. Continued momentum in the premium segment. There is margin accretion at the company level.
Analysts at ICICI Securities said in a report, “We see TTK reporting a CAGR of 14% and 10.7% in FY22-FY24E with strong volume growth, stable margins of around 15% and market share gains from the unorganized sector. To model.” The CAGR as on 6th September is the compound annual growth rate.
The road ahead isn’t particularly rosy. Increased competition threatens. Analysts at HDFC Securities Institutional Research, reviewing their Q1 results, said, “While home improvement and new housing is expected to remain the theme, we believe that increasing competition (the refurbished butterfly under Crompton) is expected to lead to TTK.” Will continue to retain earnings for
Overall, in view of the disruptions caused by the COVID-19 pandemic, TTK has stepped up its 5,000 crore revenue target for two years till FY27. Meanwhile, TTK’s UK subsidiary, Horwood Homewares, is suffering due to heavy inflation in the sector amid the ongoing geopolitical crisis. The continued delay in correction on this front is a risk.
The stock has seen a smart rebound recently, but TTK shares are still down 21% from the 52-week high seen on December 14.
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