Stock To Buy: This Midcap Stock Trading Near 52 Week Low, Brokerage Sees Robust 30% Gains

ICICI Securities has recently published a report on TTK Prestige Ltd has rated "Buy" to the stock for a target price of Rs 1,078/share. The brokerage claims a 30% upside in the shares if we Consider the estimated target price and the current market price of the stock. TTK Prestige is a TTK Group company. It is a mid cap consumer durable sector company. The company is India's number one kitchen and home appliance company. It has a market capitalization of Rs 11,504.27 crore.

Stock Outlook & Returns

The current market price (CMP) of the stock is Rs 829.95/share. Its 52-week low is Rs 744.70 recorded on 17 June 2022 and its 52-week high is Rs 1,119 recorded on 16 December 2021, respectively.

The stock in the past 1 week moved down 1.16%. Whereas, in the past 1 month, it moved down 4.39%. Over the past 1 year, the stock has fallen 17.37%. In the past 3 years, it gave 43.13% positive returns and 30.88% positive returns in the last 5 years.

Competition likely to intensify

There were four major M&A activities in kitchen appliances in the past decade such as (1) Philips - Preeti, (2) Whirlpool - Elica, (3) Crompton - Butterfly and (4) V Guard - Sunflame. We believe with larger players acquiring smaller players, competitive intensity in kitchen appliances is likely to intensify.

Formalisation to be faster

With larger players acquiring smaller players, we model the investments in distribution, innovation, ad-spend and marketing to move upwards sharply. "We believe the organised market is likely to expand at a faster pace than the growth rate in the past decade. The unorganised sector accounts for 25-35% of overall market and is likely to be impacted the most.," the brokerage has said.

Product differentiation will be key

ICICI Securities said, "We model the distribution to expand for most players in the next five years and believe the only differentiating factors will be (1) brands and (2) innovation. TTK Prestige is launching 15-20 new variants/ products every quarter across segments and we model it to be the net beneficiary."

Expect TTK Prestige to maintain market share and margins

The brokerage said, "We do not model any impact on margins or market share of TTK Prestige due to increase in competitive pressures as (1) it is steadily investing in distribution expansion, (2) investments in innovation are strong and (3) its 50+ years strong brand 'Prestige'."

Maintain BUY

The brokerage said, "We model TTK Prestige to report PAT CAGR of 9% over FY22-FY24E and RoE of 17.1% over FY22-24. We remain positive on the company's business model due to its market leadership in key business segments and competitive advantages. We maintain BUY on the stock with DCF-based target price of Rs1,078 (implied P/E 41x FY24E)."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.