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SYNOPSIS

TTK Prestige Limited, has emerged as India’s largest kitchen appliances company catering to the needs of home makers in the country.

The company offers pressure cookers, non-stick cookware, gas stoves, and domestic kitchen appliances. It also involves in property and investment business.

TTK Prestige Ltd is signing an MOU with Government of Gujarat for establishing a state of art facility for manufacture of Pressure Cookers and Kitchenware.

TTK Prestige has decided to develop its property at Bangalore as the manufacturing facility situated therein will be phased out in the next 12 months.

Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 63% over 2009 to 2012E respectively.

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.

The Company added 26 stores during the quarter taking the total number of stores to 276 across the country.

Years Net sales EBITDA Net Profit EPS P/E

FY 10 5079.40 761.60 486.50 46.33 48.57

FY 11E 7944.65 1349.14 897.99 79.33 28.36

FY 12E 8739.12 1447.38 960.61 84.86 26.51

Stock Data:

Sector: Consumer Durables

Face Value Rs. Rs.10.00

52 wk. High/Low (Rs.) 2288.35/562.25

Volume (2 wk. Avg.) 68000

BSE Code 517506

Market Cap (Rs.In mn) 25470.00

Share Holding Pattern

1 Year Comparative Graph

TTK Prestige Ltd BSE SENSEX

C.M.P: Rs.2250.00 Target Price: Rs.2610.00 Date: 5th April 2011 BUY

TTK PRESTIGE LTD

Result Update: Q3 FY 11

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Peer Group Comparison

Name of the company CMP(Rs.) Market

Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

TTK Prestige Ltd 2250.00 25470.00 46.33 48.57 20.88 100.00

Varun Industries 199.00 5793.7 10.78 18.46 3.23 15.00

Hawkins Cooker 939.80 4969.5 56.51 16.63 12.77 400.00

Investment Highlights

Q3 FY11 Results Update

TTK Prestige Ltd disclosed results for the quarter ended December 2010. Net sales

for the quarter moved up 61% to Rs.2364.50 million as compared to Rs.1467.30

million during the corresponding quarter last year. During the quarter, the

company has reported Net Profit increased to Rs. 292.90 million from Rs.153.30

million in previous year same quarter. The Basic EPS of the company stood at

Rs.25.87 for the quarter ended December 2010.

Quarterly Results - Standalone (Rs in mn)

As At Dec-10 Dec-09 %change

Net sales 2364.50 1467.30 61

PAT 292.90 153.30 91

Basic EPS 25.87 13.54 91

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Basic EPS of the company stood at Rs. 25.87

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Break up of Expenditure

Expenditure for the quarter stood at Rs.1942.40mn, which is around 57% higher

than the corresponding period of the previous year. Consumption of Raw

Material Cost of the company for the quarter accounts for 22% of the sales of the

company and stood at Rs.520.60mn from Rs.329.80mn of the corresponding

period of the previous year. Purchase of Traded Goods Cost increased 43%YoY to

Rs.684.00mn from Rs.477.60mn and accounts for 29% of the revenue of the

company for the quarter.

OPM and NPM for the quarter stood at 18% and 12% respectively from 16% and

10% respectively of the same period of the last year.

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Setting up of New Facility

TTK Prestige Ltd is signing an MOU with Government of Gujarat for establishing a

state of art facility for manufacture of Pressure Cookers and Kitchenware.

Company Profile

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 our customer and

then we 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. Prestige has been

responsible for changing the cooking habits of millions in India; it has demonstrated

how one could cook meals in minutes, the healthy way.

TTK Prestige Limited has come a long way. 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), and 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.

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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, and

Australia, Singapore, Middle East, Sri Lanka and many other countries. Products

manufactured by TTK Prestige Limited meets every relevant global standard such as

CE, GS, and UL etc. Today, Prestige has matured from a traditional pressure cooker

brand to complete kitchen solution provider and we are working to improve and

change the lifestyle of every Indian household.

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Financials Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in million) FY10A FY11E FY12E

12m 12m 12m

Description

Net Sales 5079.40 7944.65 8739.12

Other Income 11.40 44.66 49.13

Total Income 5090.80 7989.31 8788.24

Expenditure -4329.20 -6640.17 -7340.86

Operating Profit 761.60 1349.14 1447.38

Interest -11.40 -7.29 -7.72

Gross Profit 750.20 1341.85 1439.67

Depreciation -35.90 -43.16 -47.48

Profit before Tax 714.30 1298.69 1392.19

Tax -227.80 -400.69 -431.58

Profit after Tax 486.50 897.99 960.61

Extraordinary Items 37.9 - -

Net Profit 524.40 897.99 960.61

Equity Capital 113.20 113.20 113.20

Reserves 1106.90 2004.89 2965.51

Face Value(Rs.) 10.00 10.00 10.00

EPS 46.33 79.33 84.86

*A=Actual, *E=Estimated

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in million) 30-Jun-10 30-Sep-10 30-Dec-10 31-Mar-11

3m(A) 3m(A) 3m(A) 3m(E)

Description

Net Sales 1453.50 1998.60 2364.50 2128.05

Other Income 9.60 10.70 11.60 12.76

Total Income 1463.10 2009.30 2376.10 2140.81

Expenditure -1224.50 -1677.20 -1942.40 -1796.07

Operating Profit 238.60 332.10 433.70 344.74

Interest -1.70 -1.90 -1.80 -1.89

Gross Profit 236.90 330.20 431.90 342.85

Depreciation -9.80 -10.40 -11.20 -11.76

Profit before Tax 227.10 319.80 420.70 331.09

Tax -66.80 -101.80 -127.80 -104.29

Profit after Tax 160.30 218.00 292.90 226.79

Equity Capital 113.20 113.20 113.20 113.20

Face Value(Rs.) 10.00 10.00 10.00 10.00

EPS 14.16 19.26 25.87 20.03

*A=Actual, *E=Estimated

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Key Ratio

Particulars FY10 FY11E FY12E

EPS (Rs.) 46.33 79.33 84.86

EBITDA Margin (%) 14.99% 16.98% 16.56%

PAT Margin (%) 9.58% 11.30% 10.99%

P/E Ratio (x) 48.57 28.36 26.51

ROE (%) 39.87% 42.40% 31.20%

ROCE (%) 48.38% 54.14% 41.33%

EV/EBITDA (x) 33.44 18.88 17.6

Debt-Equity Ratio 0.23 0.14 0.10

Book Value (Rs.) 107.78 187.11 271.97

P/BV 20.88 12.02 8.27

Charts:

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Outlook and Conclusion

At the current market price of Rs.2250.00, the stock is trading at 28.36 x FY11E and 26.51 x FY12E respectively.

Price to Book Value of the stock is expected to be at 12.02 x and 8.27 x respectively for FY11E and FY12E.

Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs.79.33 and Rs.84.86 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 63% over 2009 to 2012E respectively.

TTK Prestige Ltd is signing an MOU with Government of Gujarat for establishing a state of art facility for manufacture of Pressure Cookers and Kitchenware.

TTK Prestige has decided to develop its property at Bangalore as the manufacturing facility situated therein will be phased out in the next 12 months.

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.

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The Company added 26 stores during the quarter taking the total number of stores to 276 across the country.

On the basis of EV/EBITDA, the stock trades at 18.88 x for FY11E and 17.60 x for FY12E.

We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular script with a target price of Rs.2610.00 for Medium to Long 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.

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

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less on electrification programs in rural areas. This factor discourages the consumer

durables companies to market their products in rural areas.

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

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.

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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 air-

conditioners (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 electronic 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.

_______________ ____ _________________________ 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.

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