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Analysis of pressure cooker market: TTK Prestige is key beneficiary

We believe incumbents like TTK Prestige will be the key beneficiaries of the steady growth in pressure cooker industry as (1) penetration of pressure cookers is still low which offers healthy growth of c.9% per annum, (2) most MNCs do not operate in pressure cooker industry which results in lower competitive pressures and stable profitability and (3) there is steady premiumisation potential with shift towards steel and hard anodized cookers. Introduction of pressure cookers which can be used on gas stoves as well as induction cook tops will also drive premiumisation. We believe TTK Prestige has an advantage of established brand, distribution and low cost manufacturing due to higher scale; we expect it to be a long-term winner.

Sub-segments of pressure cookers:

Pressure cooker segment can be divided in two major sub-segments: (1) Pressure cooker (to be used on gas stove or induction cook top) and (2) electric cooker. Pressure cookers are further divided based on the usage in outer lid, inner lid and clip-on sub-segments.

Steady growing market:

Pressure cooker market is c.Rs19.3bn and is growing at c.9% per annum. Major players are Prestige with market share of 48% and Hawkins with 35%. Electric cooker market size is c.Rs4.7bn and is growing at 7% per annum. The market leading brands are Panasonic and Prestige.

Negligible participation of MNCs:

The pressure cooker market is largely dominated by Indian companies. The profitability per pressure cooker is very low with realisation of Rs500/cooker. However, MNCs have strong presence in electric cookers which have realisation of Rs2,000/cooker.

Geographical revenue mix:

As rice consumption is relatively higher in South India, it accounts for c.35% of the industry. We also note higher consumption of idli and dhokla has led to higher growth of pressure cooker industry in South and West India. The penetration of pressure cookers is still low in North and East India. Urban India accounts for ~65% of pressure cookers in India. However, consumption of pressure cookers is rising at a faster pace in rural India.

Premiumisation opportunity:

Steel cookers account for c.30% of market and aluminum the rest. Hard anodized cookers are also steadily growing and gaining market share. We note steady shift from aluminum to steel/ hard anodized cookers will drive penetration. Also, new variants which can be used on gas stove as well as induction cooktops fetch better realisation.

Sector view & top picks:

Considering strong return ratios, healthy growth potential and low penetration levels, we remain structurally positive on white goods and durables sector. We also expect migration from unorganised to organised sector to steadily generate value. Havells and Bajaj Electricals are our top picks. We have ADD rating on TTK Prestige.

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