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05 August 2015 | E-Paper

TTK PRESTIGE

TT JAGANNATHAN

MARK TO MARKET

POWER

Weakconsumerdemand dents TTK

Prestiges revenue
Power crisis in Tamil Nadu continues to play spoilsport
Krishna Merchant
First Published: Mon, Jul 15 2013. 10 41 PM IST

6KDUH

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The only silver lining is the Rs

325 crore capital expenditure, which is expected to
.
come on stream during the year, as it will bring down imports and ease margin
pressure.
TTK Prestige Ltd shares fell more than 5% on Monday as June quarter earnings were

below consensus estimates on the back of a sharp slowdown in sales growth as

consumption demand took a hit.
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A high base effect and power woes in Tamil Nadu weighed on the revenue, recording
the worst quarter in the last two years. Net sales grew a tepid 1.3% from a year ago to
Rs
313 crore, missing analysts 16% revenue growth estimate. The power crisis in Tamil
.
Nadu continued to play spoilsport, as sales to the state are 20-25% of total revenue.
Continuous pressure on spending power due to sharp increase in price of daily
consumption now seems to impact the growth in brown goods sector, chairman TT
Jagannathan said at a recent annual general meeting.

The operating profit margin narrowed more than 210 basis points (bps) to 13.5% from a
year ago. A basis point is 0.01%.
Nitesh Sharma, midcap analyst at Espirito Santo Securities, said, Induction cooktop
has become a crowded market because of cut-throat competition, making it difficult for
players like TTK Prestige to take price hikes. TTK Prestige earns around 60% of its
revenue from induction appliances.
Raw material costs as a percentage of net sales jumped 810 bps to 34.4% on the back of a
9% drop in the rupee during the quarter. Since the company imports most of its raw
materials, the weakening rupee depressed margins. Employee expenditure and other
expenses also shot up during the quarter. As a result, profit after tax declined 16% to Rs
26
.
crore from a year ago.
The management is expecting a turnaround, banking on a good monsoon to boost the
economy. For now, the only silver lining is the Rs
325 crore capital expenditure, which is
.
expected to come on stream during the year, as it will bring down imports and ease
margin pressure. An analyst who did not want to be named said, TTK Prestige is also
planning to launch new products such as water purifiers in the current quarter which
may boost sales.
The stock is currently trading at a price to FY14 earnings multiple of 26x, which
indicates that further upside may be limited.
6KDUH

First Published: Mon, Jul 15 2013. 10 41 PM IST

Greek bailout talks

with auditors begin
as market to reopen
Monday

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Bombay high court

concludes hearing
Maggi noodles case

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