Bangalore : Shares of TTK Prestige Ltd rose 1.2% following the company’s earnings announcements after revenue grew at around 11% to Rs.391 crore, the highest in six quarters, buoyed by launches of new products in the cookware segment and a pick-up in demand from the southern region.
Sales in the cookers and cookware segment, which contributes over half the company’s revenue, grew at 16% and 32%, respectively in the September quarter, from 13% and 17% growth, respectively in the June quarter. There was only a marginal improvement in growth at the appliances division which accounts for 40% of revenue. In a post earnings conference call, Prestige’s management said that growth in induction cooktops had bottomed out and demand from the south has increased with Tamil Nadu’s power woes behind it and a stable government in Andhra Pradesh boosting consumer sentiment and, consequently, sales.
Still, despite a better second half of the monsoon, parts of central India have ended with a deficit and are seeing near-drought conditions and that could weigh down demand. The company’s management has pared the growth forecast to 15-20% for the current fiscal year compared with the guidance of 20% after the earnings announcement in the June quarter. The management said the company is yet to see any improvement in consumer sentiment over the economic recovery translating into higher consumer demand.
Operating margin narrowed 76 basis points to 12.1% on the back of a rise in overhead costs at the company’s recently commissioned Gujarat plant, which is yet to see full capacity utilization. TTK Prestige increased prices of cookware by 5% for the first time this fiscal year, although aluminium prices have risen by around 11% since April—another factor that weighed down margins. The management expects operating margin in the range of 12.5-13% for FY15.
Net profit declined around 8% to Rs.28 crore as the company could not avail the tax concession on its newly commissioned plants. TTK Prestige shares have outperformed the S&P BSE 500 index in the past six months, rising around 30% compared with 20% gains in the broader markets
Source : Livemint