TTK PRESTIGE LTD

Result Update: Q2 FY 11

C.M.P: Target Price: Date:

Rs. 1547.40 Rs.1750.00 13 Jan 2011

BUY
SYNOPSIS

Stock Data: Sector: Face Value Rs. 52 wk. High/Low (Rs.) Volume (2 wk. Avg.) BSE Code Market Cap (Rs.inmn)
Consumer Durables

10.00 1752.00/411.50 36000 517506 17516.37

TTK Prestige Limited, has emerged as Indias 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 has decided to develop its property at Bangalore as the manufacturing facility situated therein will be phased out in the next 12 months. The companys net sales and net profit are expected to grow at a CAGR of 25% and 55% over FY09 to FY12E. 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.

Share Holding Pattern

1 Year Comparative Graph

Years FY 10 FY 11E FY 12E

Net sales 5079.40 6806.40 7827.36

EBITDA 761.60 1101.20 1254.61

PAT 486.50 725.56 826.51

EPS 46.33 64.93 73.01

P/E 33.40 23.83 21.19

Table of Content
Content 1. Peer Group Comparison 2. Investment Highlights 3. Company profile 4. Financials 5. Charts & Graph 6. Outlook and Conclusion 7. Industry Overview Page No. 03 03 06 07 09 11 12

Peer Group Comparison

Name of the company TTK Prestige Ltd Varun Industries Hawkins Cookers Kanchan International
*As on 13/01/2011

CMP(Rs.) 1547.40 217.35 1118.50 170.00

Market Cap.(Rs.Mn.) 17516.57 4806.50 5914.40 545.70

EPS(Rs.) 46.33 16.48 67.61 1.35

P/E(x) 33.40 13.19 16.54 125.93

P/Bv(x) 14.36 2.79 15.20 55.56

Dividend (%) 100.00 15.00 400.00 0.00

Investment Highlights Results Updates (Q2 FY11) (Standalone)

For the Second quarter, the top line of the company increased 43%YoY and stood at Rs.1998.60mn against Rs.1393.50mn of the same period of the last year. The Profit after Tax of the company for the quarter stood at Rs.218.00mn from Rs.140.90mn of the corresponding period of the previous year i.e. an increase of 55%YoY.

EPS of the company for the quarter stood at Rs.19.26 for equity share of Rs.10.00 each.

Expenditure for the quarter stood at Rs.1677.20mn, which is around 42% higher than the corresponding period of the previous year. Raw material cost of the company for the quarter accounts for 22% of the sales of the company and stood at Rs.449.10mn from Rs.324.30mn of the corresponding period of the previous year i.e., an increase of 38%YoY. Other Expenditure increased 24%YoY to Rs.436.70mn from Rs.353.60mn and accounts for 22% of the revenue of the company for the quarter.

OPM and NPM for the quarter stood at 17% and 11% respectively from 16% and 12% respectively of the same period of the last year.

Setting up of New Facility TTK Prestige Ltd has informed that the Company 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 Indias 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 worlds 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, OTGs, Kitchen Hoods (Chimneys), 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. 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, 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, 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.

Financial Results 12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face Value (Rs) Total No. of Shares EPS FY10 12m 5079.40 11.40 5090.80 -4329.20 761.60 -11.40 750.20 -35.90 714.30 -227.80 524.40 113.20 1106.90 10.00 11.32 46.33 FY11E 12m 6806.40 39.40 6845.80 -5744.60 1101.20 -8.38 1092.82 -41.29 1051.53 -325.98 735.06 113.20 1841.96 10.00 11.32 64.93 FY12E 12m 7827.36 41.37 7868.73 -6614.12 1254.61 -8.80 1245.81 -46.24 1199.57 -373.07 826.51 113.20 2668.46 10.00 11.32 73.01

Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) Description Net Sales Other income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face Value (Rs) Total No. of Shares EPS

31-Mar-10 3m 1235.10 7.00 1242.10 -1056.00 186.10 -2.80 183.30 -10.40 172.90 -54.50 127.90 113.20 10.00 11.32 11.30

30-Jun-10 3m 1453.50 9.60 1463.10 -1224.50 238.60 -1.70 236.90 -9.80 227.10 -66.80 160.30 113.20 10.00 11.32 14.16

30-Sep-10 3m 1998.60 10.70 2009.30 -1677.20 332.10 -1.90 330.20 -10.40 319.80 -101.80 218.00 113.20 10.00 11.32 19.26

31-Dec-10 E 3m 2118.52 12.09 2130.61 -1779.55 351.05 -1.98 349.08 -10.61 338.47 -104.93 233.54 113.20 10.00 11.32 20.63

Key Ratio

Particulars EBIDTA % PAT % P/E ratio (x) ROE - % ROCE - % EV/EBIDITA (x) Debt Equity Ratio Price/Book Value
A-Actual E-Expected

FY09 A 10% 6% 78.27 29% 36% 3.84 0.27 2.53

FY10 A 15% 10% 33.40 46% 62% 23.00 0.02 14.36

FY11 E 16% 11% 23.83 38% 53% 15.91 0.02 8.96

FY12 E 16% 11% 21.19 30% 43% 13.96 0.01 6.30

Charts:
Net sales & PAT

P/E Ratio (x)

P/BV (X)

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EV/EBITDA(X)

Outlook and Conclusion

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At the market price of Rs.1547.40, the stock is trading at 23.83 x and 21.19 x for FY11E and FY12E respectively. On the basis of EV/EBDITA, the stock trades at 15.91 x for FY11E and 13.96 x for FY12E. Price to book value of the company is expected to be at 8.96 x for FY11E and 6.30 x for FY12E respectively. EPS of the company is expected to be at Rs.64.93 and Rs.73.01 for the earnings of FY11E and FY12E respectively. The companys net sales and net profit are expected to grow at a CAGR of 25% and 55% over FY09 to FY12E. We recommend BUY in this particular scrip with a target price of Rs.1750.00 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 less on electrification programs in rural areas. This factor discourages the consumer durables companies to market their products in rural areas. Sector outlook

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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. 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 airconditioners (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.

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Disclaimer:

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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 its 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.

Firstcall India Equity Research: Email info@firstcallindia.com C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods B. Prathap IT D. Ashakirankumar Automobile A. Rajesh Babu FMCG H.Lavanya Oil & Gas A.Prathibha Diversified Dheeraj Bhatia Diversified Manoj kotian Diversified Nimesh Gada Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPOs, QIPs, F.P.Os,Takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact:

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