TTK Prestige is one of the multi-bagger stocks of recent years. The stock price has skyrocketed from about Rs.150 in 2006 to Rs.4,290 now and valuation has moved up from 15 to 33 times. With the last decade being a spectacular period for kitchen appliance makers with rising disposable income among the middle class and shift in preference from unbranded to branded goods, TTK Prestige did outstandingly well.
The company’s revenue has grown at an annualised rate of 23 per cent in the last 10 years and profit growth has been at 32 per cent annually.
The company’s growth in the last decade is, however, thanks not just to the consumption boom but also its efforts to grow from a small South-Indian brand to a national player.
Increased focus on marketing, aggressive expansion into non-South markets by building up distribution network and launch of new innovative products every year, have all helped TTK gain market share.
Over the last one decade, the company has expanded its product portfolio to an array of kitchen appliances, including mixer-grinders, gas stoves, induction stove and cookware, in addition to pressure cookers.
Today, of its total revenue, pressure cookers account for just 33 per cent. Non-South markets now contribute a little over 50 per cent to the revenue.
The years 2013-14 and 2014-15 were, however, difficult for the company due to the slowdown in consumer spending. In 2013-14, revenue declined 5 per cent and in 2014-15, it was a lacklustre 7 per cent growth. High inflation and drop in consumer spends apart, the power outages in Tamil Nadu (brought down sales of induction cooktop) hit sales.
In the last nine months, however, with macros improving and with TTK Prestige’s continued efforts to grow market share, growth has revived. In the nine months ending December 2015, the company reported revenue growth of 10 per cent.
TTK Prestige’s strong brand and R&D capabilities should help it sustain the current growth and outshine peers, including Hawkins and Stovekraft, in the long term.
Also, given that the company, of late, has been working out ways to increase its presence in the e-commerce channel, sales should receive a boost.