TTK Prestige Q1 Results Review - Demand Environment To Improve; Assign Neural Rating: Yes Securities

Yes Securities Report

TTK Prestige Ltd. delivered flattish revenue growth (2.7% lower than estimates). Flattish revenue growth was on due to liquidation of trade sock and larger share of wallet going towards summer related products. On the channel from the new age channels like modern trade, Ecommerce, quick commerce continues to do well, traditional GT channel has been subdued.

Rural Channel driven by microfinance institution has not performed well as they were impacted by elections. The company has able to maintain its gross margins, while negative operating leverage has impacted Ebitda margins. On the positive front month of June has seen double digit growth with growth momentum being carried in Q2 as well.

TTK Prestige has chalked out the growth strategy where it will be aggressively focus on launching new innovative products which has been lacking by the company. New products have been contributing large part of the sales and management expects industry demand to come back in next couple of quarters.

Management transition has been smooth, and Venkatesh Vijay Raghavan will take over as Managing Director and Chief Executive Officer of the company from October 1, 2024.

Expectation of the industry growth, management chalking out strategy of outperforming industry and higher number of new launches we increase the target multiple to 45 times versus 40 times earlier and arrive at target price of Rs 978. We now assign Neutral rating as there is limited upside from the current market price.

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