2QFY2019 Result Update | Kitchen Appliances
October 25, 2018
TTK Prestige
BUY
CMP
`6,202
Performance Update
Target Price
`7,500
Y/E March (` cr)
Q2FY19
Q2FY18
% yoy
Q1FY19
% qoq
Investment Period
12 Months
Net sales
552
515
7.2
419
31.7
EBITDA
81
66
22.7
55
47
Stock Info
EBITDA margin (%)
14.7%
12.8%
13.2%
Sector
Kitchen appliances
Adjusted PAT
54
42
28.5
36
50
Avg. Daily Volume
3,943
Face Value (`)
10
For Q2FY2019, TTK Prestige (TTK) posted decent performance with 7.2%/28.5%
BSE Sensex
34,034
yoy growth in revenue/ PAT led by 187 bps expansion in margin. The company
Nifty
10,146
has delivered strong profitability during the quarter despite revenue loss of ~ `15
Reuters Code
TTKL.BO
cr due to Kerala flood (Kerala normally contributes 10%+ of Q2 revenue).
Bloomberg Code
TTKPT.IN
Revenue rose 7.2%: Q2’s top-line increase was subdued mainly due to higher
base effect (GST restocking happened in Q2FY2018) and Kerala flood. Cookers
Shareholding Pattern (%)
segment grew by 12% and appliances segment grew by 8% yoy while cookware
sales fell by 2% yoy. It sales is likely to pick up in H2 led by new LPG connection
Promoters
70.4
under Ujjawala scheme and newly launched category like cleaning solutions.
MF / Banks / Indian Fls
8.5
Margins improved by 187 bps : On the operating front, the company’s margin
FII / NRIs / OCBs
9.7
were robust at 14.7% due to better product mix and one-time other expenses in
Indian Public / Others
11.4
Q2FY2018. H2 is likely to see similar margin level that of H1 on the back of
improving product mix and distribution network.
Abs. (%)
3m 1yr 3yr
Outlook and Valuation: We have fine tuned our earnings estimates in view of
Sensex
(8.2)
3.8
22.9
subdued revenue off-take while increasing operating margin in view of robust H1
TTK Prestige
5.2
(0.2)
45.5
performance( excluding Kerala impact). We now expect TTK to report a CAGR of
~16%/23% in revenue/ earnings over FY18-20E. The stock is currently trading at
Price Chart
29x its FY2020 earnings, which is at discount to its 5 year average PE multiple of
40x. We maintain BUY with a revised target price of `7500 (35x FY2020E EPS).
Key Financials
Y/E March (` cr)
FY2016
FY2017
FY2018E
FY2019E
FY2020E
Net Sales
1,559
1,837
1,982
2,254
2,649
% chg
12.3
17.8
7.9
13.8
17.5
Net Profit
115.6
150.7
164.5
205.5
247.1
% chg
25.2
30.3
9.2
24.9
20.3
OPM (%)
11.8
11.4
12.7
14.1
14.3
Source: Company, Angel Research
EPS (Rs)
100.0
130.3
142.3
177.8
213.8
Nidhi Agrawal
P/E (x)
62.0
47.6
43.6
34.9
29.0
022 - 3935 7800 Ext: 6872
P/BV (x)
9.4
7.9
6.6
5.7
4.9
RoE (%)
16.0
17.6
16.1
17.3
17.8
RoCE (%)
22.4
19.0
19.6
22.0
22.7
EV/Sales (x)
4.5
3.9
3.5
3.1
2.6
EV/EBITDA (x)
38.6
34.0
27.9
21.8
18.2
Source: Company, Angel Research
Please refer to important disclosures at the end of this report
1
TTK Prestige |2QFY2019 Result Update
Exhibit 1: Q2FY2019 Performance
In Cr
Q2FY18
Q1FY19
Q2FY19
YOY Growth
H1FY18
H1FY19
YOY Growth
Total Income
515
419
552
7.3%
872
971
11.4%
Total Expenditure
449
363
471
5.0%
762
835
9.6%
Raw Material Consumed
82
113
125
52.9%
199
239
20.1%
Stock Adjustment
78
-4
18
-77.5%
38
14
-63.4%
Purchase of Finished Goods
142
129
176
24.4%
272
305
12.0%
COGS
302
238
319
5.9%
509
558
9.6%
Employee Expenses
33
38
40
21.9%
64
78
21.4%
Other Expenses
114
87
112
-2.1%
189
199
5.6%
Total Expenditure
449
363
471
5.0%
762
835
9.6%
EBITDA
65.8
55.5
81.0
23.0%
111
136
23.5%
Other Income
2.2
4.7
6.4
188.8%
133
11
-91.7%
Interest
0.5
0.3
0.7
34.7%
1
1
3.2%
PBDT
67.6
59.8
86.8
28.4%
243
147
-39.6%
Depreciation
6.2
6.3
6.5
5.2%
12
13
3.0%
PBT
61.4
53.6
80.3
30.7%
230
134
-41.9%
Tax
19.5
17.7
26.5
35.9%
55
44
-19.0%
Reported Profit After Tax
41.9
35.9
53.8
28.4%
176
90
-49.0%
Extra-ordinary Items
-
-
-
102
-
Adjusted PAT
41.9
35.9
53.8
28.4%
74
90
21.8%
Ratios
EBITDA margin (%)
12.8%
13.2%
14.7%
12.7%
14.0%
PAT margin %
8.1%
8.6%
9.7%
20.2%
9.2%
Tax rate %
31.8%
33.0%
33.0%
23.7%
33.0%
Source: Company, Angel Research
Risks to our estimates
Abrupt fluctuations in its primary raw materials- Aluminum and steel whose prices
are linked to global commodity prices. Although the company has been able to
pass on the increase in raw material prices to consumers in the past owing to a
strong brand, any failure to do so in the future can adversely impact operating
margins.
Foreign exchange movement- The company imports raw materials and finished
goods from outside India as well as makes export sales to countries outside the
territories in which they operate from which exposes it to foreign currency risk.
Foreign currency exchange risks are managed by entering into forward contracts
against foreign currency vendor payables.
Excessive competition/ pricing war - TTK is competing with many different players
in different category. Many foreign players are also entering Indian markets which
could lead aggressive competition, pricing war. So far, TTK has gained market
share from its competition over the years with its innovative culture and growth
strategies.
October 25, 2018
2
TTK Prestige |2QFY2019 Result Update
Profit & Loss Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019E FY2020E
Total operating income
1,559
1,837
1,982
2,254
2,649
% chg
12.3
17.8
7.9
13.8
17.5
Total Expenditure
1,376
1,627
1,731
1,936
2,271
Raw Material
931
1,085
1,124
1,274
1,492
Personnel
114
138
159
176
207
Selling and Administration Expenses
313.8
374.0
421.0
462.1
543.0
Others Expenses
17
31
27
25
29
EBITDA
183
210
251
318
378
% chg
20.0
14.5
19.5
26.8
18.9
(% of Net Sales)
11.8
11.4
12.7
14.1
14.3
Depreciation& Amortisation
21
26
26
28
32
EBIT
162
184
225
290
346
% chg
21.4
13.4
22.3
28.6
19.3
(% of Net Sales)
10.4
10.0
11.4
12.8
13.0
Interest & other Charges
6
11
7
7
7
Other Income
10
11
141
20
25
(% of PBT)
6.2
5.9
39.4
6.6
6.9
Share in profit of Associates
-
-
-
-
-
Recurring PBT
167
184
359
302
363
% chg
25.1
10.2
95.3
(15.8)
20.3
Tax
51
33
96
97
116
(% of PBT)
30.7
18.1
26.6
32.0
32.0
PAT (reported)
116
151
263
206
247
Extraordinary Items
-
-
99
-
-
Less: Minority interest (MI)
0
0
0
0
0
PAT after MI (reported)
115
150
263
205
247
ADJ. PAT
116
151
165
206
247
% chg
25.2
30.3
9.2
24.9
20.3
(% of Net Sales)
7.4
8.2
8.3
9.1
9.3
Fully Diluted EPS (Rs)
100.0
130.3
142.3
177.8
213.8
% chg
25.2
30.3
9.2
24.9
20.3
October 25, 2018
3
TTK Prestige |2QFY2019 Result Update
Consolidated Balance Sheet
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019
FY2020
SOURCES OF FUNDS
Equity Share Capital
12
12
12
12
12
Reserves& Surplus
711
842
1,008
1,175
1,381
Shareholders Funds
723
854
1,020
1,187
1,392
Equity Share Warrants
-
-
-
-
-
Total Loans
-
113
129
129
129
Deferred Tax Liability
-
-
-
-
-
Other liabilties
6.8
6.3
5.4
5.4
5.4
Total Liabilities
730
973
1,154
1,322
1,527
APPLICATION OF FUNDS
Gross Block
351
567
598
688
778
Less: Acc. Depreciation
21
58
108
137
169
Net Block
330
510
490
552
609
Capital Work-in-Progress
3
2
4
4
4
Investments
68
75
167
167
167
Current Assets
583
680
880
1,035
1,256
Inventories
325
380
437
497
584
Sundry Debtors
175
215
258
294
345
Cash
31
65
136
188
261
Loans & Advances
52
20
49
56
66
Other Assets
-
-
-
-
-
Current liabilities
238
281
373
423
496
Net Current Assets
346
400
507
612
761
Deferred Tax Asset
(29)
(35)
(42)
(42)
(42)
Total Assets
730
973
1,154
1,322
1,527
October 25, 2018
4
TTK Prestige |2QFY2019 Result Update
Cash Flow Statement
Y/E March (` cr)
FY2016
FY2017
FY2018
FY2019
FY2020
Profit before tax
167
184
359
302
363
Depreciation
21
26
26
28
32
Change in Working Capital
(64)
(70)
(47)
(53)
(76)
Interest / Dividend (Net)
9
(0)
(6)
7
3
Direct taxes paid
(36)
(37)
(93)
(97)
(116)
Others
(19)
(9)
(112)
1
5
Cash Flow from Operations
78
94
127
188
211
(Inc.)/ Dec. in Fixed Assets
(17)
(26)
(12)
(90)
(90)
(Inc.)/ Dec. in Investments
11
(142)
9
20
25
Cash Flow from Investing
(6)
(168)
(3)
(70)
(65)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
0
113
0
0
0
Dividend Paid (Incl. Tax)
0
0
0
0
0
Interest / Dividend (Net)
(2)
(8)
(75)
39
(31)
Cash Flow from Financing
(71)
106
(113)
0
(73)
Inc./(Dec.) in Cash
2
31
11
119
73
Opening Cash balances
25
27
58
69
188
Closing Cash balances
27
58
69
188
261
Source: Angel Research, Company
October 25, 2018
5
TTK Prestige |2QFY2019 Result Update
Key Ratios
Y/E March
FY2016
FY2017
FY2018
FY2019
FY2020
Valuation Ratio (x)
P/E (on FDEPS)
62.0
47.6
43.6
34.9
29.0
P/CEPS
49.5
38.3
23.4
28.9
24.2
P/BV
9.4
7.9
6.6
5.7
4.9
Dividend yield (%)
0.4
0.4
0.5
0.5
0.6
EV/Sales
4.5
3.9
3.5
3.1
2.6
EV/EBITDA
38.6
34.0
27.9
21.8
18.2
EV / Total Assets
9.7
7.3
6.1
5.3
4.5
Per Share Data (Rs)
EPS (Basic)
100.0
130.3
142.3
177.8
213.8
EPS (fully diluted)
100.0
130.3
142.3
177.8
213.8
Cash EPS
118.1
152.6
250.1
202.2
241.7
DPS
22.0
27.0
30.0
33.0
36.3
Book Value
625.5
738.4
882.1
1,026.9
1,204.4
Dupont Analysis
EBIT margin
10.4
10.0
11.4
12.8
13.0
Tax retention ratio
0.7
0.8
0.7
0.7
0.7
Asset turnover (x)
2.5
2.2
2.3
2.3
2.4
ROIC (Post-tax)
18.0
18.2
19.5
20.5
21.5
Cost of Debt (Post Tax)
-
0.1
0.0
0.0
0.0
Returns (%)
ROCE
22.4
19.0
19.6
22.0
22.7
Angel ROIC (Pre-tax)
26.0
22.3
26.6
30.1
31.6
ROE
16.0
17.6
16.1
17.3
17.8
Turnover ratios (x)
Asset Turnover (Gross Block)
4.4
3.2
3.3
3.3
3.4
Inventory / Sales (days)
76
75
81
81
81
Receivables (days)
41
43
48
48
48
Payables (days)
93
94
121
121
121
Working capital cycle (ex-cash)
(days)
24
24
7
7
7
Solvency ratios (x)
Net debt to equity
(0.1)
(0.0)
(0.2)
(0.2)
(0.2)
Net debt to EBITDA
(0.5)
(0.1)
(0.7)
(0.7)
(0.8)
Interest Coverage (EBIT / Interest)
27.6
16.6
30.5
39.2
46.8
Source: Company, Angel Research
October 25, 2018
6
TTK Prestige |2QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER:
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
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decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
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referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
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contrary view, if any
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Disclosure of Interest Statement
TTK Prestige
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or
No
relatives
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on Expected Returns:
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period)
Reduce (-5% to -15%)
Sell (< -15%)
October 25, 2018
7
