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2H to see demand revival; maintain BUY
Result Synopsis
TTKPT registered marginally better than expected performance with revenue decline of
8.1%. Revenue decline can be attributed to1) lower discretionary spends amid high
inflation, 2) Wallet share has been diverted to other avenue of spending resulting in lower
spends for kitchen, and 3) Stocking by the dealers have been lower. Gross margins have
seen strong sequential as well as yoy expansion as raw material prices have been benign,
and company has not compromised on brand premium for the revenue growth. Demand is
expected to be better from 2nd half as base will be favorable and in current fiscal festivals
will be in Q3. Considering the track record of launching new innovative products and brand
salience, we continue to maintain BUY as we feel TTKPT should command higher multiple
as company is market leader in its core categories and has best-in-class margin profile and
it also carries substantial free cashflow even after deploying enough working capital for
cost effective supply chain as well as ongoing capex.
We expect FY23-25E normalized growth trajectory of 9% revenue CAGR. With margins
also expected to be 13.8% by FY25 in line with management guidance, we estimate FY23-
25E EBITDA and PAT CAGR of 17% and 21% respectively. We remain upbeat on the stock
as company has been able to protect its margin and market share despite challenging
environment and company is confident of strong double-digit revenue growth despite
uncertainties in exports and UK subsidiary Horwood. We continue to value the company
at 40x FY25 EPS and arrive at a revised PT of Rs938 maintain BUY.
Result Highlights
? Topline – Revenue was marginally better than estimates with revenue declining by
8.3%. Cooker, Cookware and Appliances saw decline of 8.1%,14.9% and 7.7%
respectively, while its newer products saw revenue growth of 9.8%.
? Margins – Company EBITDA margin at 11.8% was lower by 207bps and 232bps
on sequential basis on negative operating leverage as company has not
compromised on brand premium for higher growth.
? Exports – The global slowdown in developed markets has resulted in lower exports
sale. Exports for the quarter stood at Rs197mn vs Rs223mn. Company expects
exports to pickup from Q3 onwards.
? Judge brand – During the quarter the company has repositioned its Judge brand,
where various new products were launched during the quarter and company is also
expanding distribution network for Judge brand.

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