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Robust growth in earnings backed by higher sales and improved profit margins plus a re-rating in valuations saw the stock of TTK Prestige treble its price over the last one year.
Strong volume growth in sales was buttressed by higher demand for kitchen appliances on peg-up in consumer spending, expansion of the company's distribution network in the tier-II/III cities and new product launches. While domestic sales registered a growth of 50 per cent in 2010-11, exports registered a growth of 62 per cent. TTK Prestige's pressure cookers recorded a 32 per cent jump while non-stick cookware registered an 83 per cent increase in volumes for the year. The company's recent launches — induction compatible pressure cookers and cookware and microwave pressure cooker have also been well received by the market.
From a price-earning multiple of 15-20 times last year, the stock is trading at almost 38 times now.
Market's optimism on the stock of TTK Prestige follows not only on the stock's consumer tag, but also the company's leadership position in the organised market for pressure cookers. The strong brand name lets the company make price increases without much difficulty. TTK Prestige improved its operating margins by around one percentage point to 16.4 per cent last year even as many others struggled to hold margins.
TTK Prestige is almost debt free with just Rs 2.24 crore of unsecured loan in its balance sheet as of end-March. The company has estimated a capital outlay of Rs 168 crore over the next two years for expansion of capacities and establishment of new plant in western India
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