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Result Synopsis

TTKPT 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 MFI 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. TTKPT 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 Mr. Venkatesh Vijay Raghavan will take over as MD & CEO of the company from 1st October 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 45x vs 40x earlier and arrive at PT of Rs978. We now assign Neutral rating as there is limited upside from the CMP.

We continue to expect FY24-26E growth trajectory of 9.5% revenue CAGR, while we moderate our margin expectation as there will be expenses towards, the consultancy fees and new launches. We now estimate FY24-26E EBITDA and PAT CAGR of 16.5% and 12.3% respectively. We however remain mildly positive on the stock as company has performed relatively better than peers in the challenging environment and it will be the first one to bounce back once the demand trends improve. We now value the company at 45x on FY26 EPS resulting in PT of Rs978 and assign Neutral rating.

Result Highlights

* Topline – Revenue was marginally lower than estimates with revenue remaining flattish yoy. trade stock liquidation and higher allocation of wallet towards the summer products impacted topline.

* Margins – Company EBITDA margin at 10.8% contracted by 92bps on yoy basis, this is lower than the company’s historical margins. However, its EBITDA margins are being relatively less impacted as compared to its peers.

* Exports – Exports have continued to remain feeble due to the implications from escalating geo-political tension impacting the container availability. However, outlook for exports remains positive.

*  New product launches – The company is aggressively focusing new innovative product launches, which company had been lacking in past few quarters. The company plans o launch 83 new SKU’s in Q2 which is more than double from Q1

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