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- 26 May 2023
- ICICIdirect Research
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TTK PRESTIGE Q4FY23 PRINT BELOW EXPECTATIONS ON ALL FRONTS
TTKPRESTIG - 616 Change: -5.45 (-0.88 %)News: Revenue declined 13% YoY to Rs 566 crore (I-direct estimate: Rs 680 crore). During the quarter all the channels were active, but there was severe discounting for lower end products by certain channels and online and general trade confidence was low and there was severe discounting at the lower end by some brands and online channels. Gross margins declined 207 bps YoY (down 184 bps QoQ) at 38.5% (I-direct estimate: 41%). The overall business climate was not conducive for sale of discretionary products and hence company had to spend more on promotional activities to counter the competitive intensity which negatively impacted the gross margins. EBITDA margins declined 226 bps YoY to 14.1% (up 218 bps QoQ) vs. I-direct estimate: 14.8%.
View: The decline in revenues on account of company not participating in excessive discounting compared to its peers. The company has added 9 new SKUs and new launches are being well received in the market and revenue growth could pick up in the coming quarters. The Company continues its focus on improvement in efficiencies and management of critical costs to maintain EBITDA margins at a healthy level. On the liquidity front, the company is well placed and carries substantial free cash of more than | 840 crores even after deploying significant amount in working capital for a cost effective supply chain as well ongoing capex. We believe that the muted demand and high competitive intensity would restrain margin and revenue growth in near term. However over the longer term, TTK with its vast bouquet of innovative products and pan India presence would be and able to register sustainable growth in revenues and profits.
Impact: Negative