7,000% rise in 10 years and then in a rut: Can TTK bounce back?

NEW DELHI: TTK Prestige would ring a bell with most Indians, as Prestige pressure cooker has been a household name. The company, which started its journey six decades ago, has grown into a leading player in kitchen appliances, with some 600 products in the market.

In the last 10 years, the company has grown both topline and bottomline consistently; sales have grown at close to 20 per cent annually and profits at 25 per cent. But sales growth has slowed down to around 7 per cent in last five years.

The stock has been steady outperformer, rising from Rs 122 on June 26, 2008 to trade at Rs 8,911 apiece on January 17, 2018, a 73-times expansion.

Its listed peer Hawkins Cookers delivered 1,577 per cent return between June 26, 2008 and June 26, 2018, while Gandhimati Butterfly rose 3,000 per cent in the same period.

But TTK Prestige has hit a speed bump after hitting a 52-week high of Rs 8,911 on January 17, 2018. On Tuesday, June 26, 2018, the stock traded at Rs 5,845, down 34 per cent in just five months!

What’s causing this pain?

G Chokkalingam, Founder & Managing Director at Equinomics Research & Advisory, says it was a bubble waiting to burst.

But independent market analyst Ambareesh Baliga has a completely different take on it. “TTK Prestige was a fresh discovery post the Lehman Brother carnage and the story played out well over the next few years, which saw a primarily pressure cooker company transform itself into a kitchen solutions provider with topline growing 3x and bottomline at more than 5x.

However, when a story matures, there comes a stage when the company fails to surprise investors and enters a steady phase.

“This results in disappointments for aggressive investors, who end up offloading shares,” Baliga says.

The management, however, appears confident about the business.

In an interaction with ETNOW last week, Chairman TT Jagannathan said he expected volume growth in high teens this quarter, a little better than that next quarter and above 20 per cent in the subsequent quarters.

The company reported a 32.35 per cent drop in consolidated net profit for March quarter at Rs 37.44 crore against Rs 55.35 crore posted for the same quarter of the last financial year.

Total income for the quarter stood at Rs 448.22 crore against Rs 399.07 crore a year ago.

Jagannathan said the government’s Ujjwala scheme to provide LPG connections to BPL households has benefitted the company, as it has fuelled rural demand.

“Rural demand seems to be picking up nicely. The rural people want better brands,” Jagannathan said, when asked if there was a conscious strategy to push products at lower price points for those markets.

TTK Prestige has presence in the lower price point products segment through the Judge brand.

Given the high cash levels on its books, the company is looking to acquire a branded player.

As of Wednesday's close, the company’s m-cap stood at Rs 6,813 crore and the BSE share price at Rs 5,848 apiece.