TTK Prestige Ltd. share price target

TTK Q1FY25 revenue remained flat YoY (+0.1% YoY). However, EBITDA/PAT declined 10.2%/13% YoY. We reckon, subdued consumer demand has continued to weigh on TTK’s revenue growth.

Highlights: (1) TTK reported revenue decline of 3.6% in FY24 primarily due to weak consumer demand. However, there was revival in H2FY24 with 3.6% revenue growth YoY. We believe it indicates higher growth in FY25.

Management confident of robust demand recovery through H2FY24 as festive and wedding seasons coincide

TTK’s Q2FY24 primarily indicates impact of steep increase in competitive intensity. Revenues declined 13.4% YoY with likely market share loss (in our view) on subdued consumer demand and aggressive discounting by peers. We model weak performance in Q3FY24 but a recovery by Q4FY24 and H1FY25.

Management optimistic on festive-led demand revival in H2FY24; foresees no pricing action as commodity prices have eased

We believe the steep competition at bottom-of-pyramid continues to impact TTK Prestige as it reported revenue decline of 6.6% YoY with likely market share decline, in our view. We model recovery from H2FY24 due to (1) improving maturity of Judge brand and likely market share gains at bottom-of-pyramid, (2) likely launch of premium brand to tap consumers at top end and (3) favourable base.

Management optimistic of strong demand recovery in H2FY24; foresees no requirement for price hikes in near term

As TTK wants to focus on innovation and does not plan to participate in steep discounting of products in value-for-money segment, there is likely loss of market share in economy products, in our view.

The investors (we spoke to on TTK Prestige) believe that TTK is a slow growth company. TTK reported EBITDA CAGR of just 4.3% over FY12-17, materially lower than its peers. However, we note there is stark improvement in EBITDA CAGR over FY17-22.

TTK reported weak Q3FY23 led by lower volumes at the bottom of the pyramid. Some peers have increased the trade discounts and it has led to lower sales of TTK’s entry level products. As TTK plans to focus on market shares as well as margins, it has decided not to offer excess discounts.

Post four M&A activities such as (1) Philips – Preeti, (2) Whirlpool – Elica, (3)
Crompton – Butterfly and (4) V Guard – Sunflame, we model the competitive intensity to be higher with more investments by larger players in distribution, innovation, branding and marketing.

Demand for premium products buoyant but entry-level segment remains distressed

TTK Prestige reported revenue decline of 1.9% YoY in Q2FY23, as growth in all business segments declined YoY, ex-cooker.