Equities TTK Prestige India Researchbreport.myiris.com/ksbl/TTKPREST_20120926.pdf · 26-09-2012...

Consumer Durables September 26, 2012

TTK Prestige

Bloomberg: TTKPT INReuters: TTKP.BO SELL

Institutional Equities

India Research

INITIATION REPORT

Recommendation

CMP: Rs3,787

Target Price: Rs3,173

Downside (%) 16%

Stock Information Market Cap. (Rs bn / US$ mn) 43/780

52‐week High/Low (Rs) 3,967/2,151

3m ADV (Rs mn /US$ mn) 413/7.6

Beta 0.95

Sensex/ Nifty 18,694/5,674

Share outstanding (mn) 11

Stock Performance (%) 1M 3M 12M YTD

Absolute 11.0 22.4 44.5 51.6

Rel. to Sensex 5.8 11.7 28.8 30.7

Performance

Source: Bloomberg

1 Year Forward P/E

Source: Karvy Institutional Research

Analysts Contact Jagadishwar Pasunoori, CFA, FRM

+91‐40‐44857912

[email protected]

2,000

2,500

3,000

3,500

4,000

15,000

16,000

17,000

18,000

19,000

S‐11

N‐11

J‐12

M‐12

M‐12

J‐12

S‐12

Sensex (LHS) TTK Prestige

0

5

10

15

20

25

30

Apr‐

07

Apr‐

08

Apr‐

09

Apr‐

10

Apr‐

11

Apr‐

12TTK Prestige 1 yr Forward P/E

Mean

Mean+Std Dev

23.0

A Pricy Kitchen King TTK Prestige (TTKP) has transformed itself from a single product company

to a “total kitchen appliances company” in the last five years. It is the market

leader in pressure cookers and also commands numero uno position in

induction cook‐tops with a market share of 20%.

Distributor Survey Reveals Deceleration of Sales Growth: Our distributor

survey across India has revealed that the volume growth in Pressure Cookers

& Non‐Stick Cookware has decelerated to single digits and volume growth in

KEA – including Induction Cook‐tops – has decreased to mid‐teens.

Competitive Advantage in Pressure Cookers may not be extended to KEA:

We believe TTKP may not be able to enjoy similar competitive advantage in

KEA segment as it enjoys in Pressure Cookers where it is the leader with 40%

market share. TTKP enjoys market share of 20% in Induction Cook‐tops and

high‐single digits in rest of the KEA products. TTKP outsources most of its

KEAs. Moreover, the organized pressure cooker market is closer to duopoly

whereas KEA segment markets represent oligopolies. TTKP generates an

EBITDA margin of ~19% on in‐house manufacturing and ~12% on

outsourced products. We believe the company’s margin will reduce as KEA

outgrows rest of the segments.

Returns Ratios to Decline Going Forward: TTKP has generated near 50%

ROE in the last three years due to higher asset turnovers and increased EBIT

Margin. We believe the ROE will decelerate to near 30% in FY16E due to

decreased EBIT Margin and lower asset turnovers as the company has been

investing in capital expenditure. We believe that TTKP’s capacity utilization

will peak by FY14E. In order to drive sales further the Company has to hike

in‐house capacity or rely on outsourcing after FY14E. Both the options will

adversely impact TTKP’s cash flows and return ratios from FY15E onwards.

Outlook & Valuation

Revenue and net income of TTKP grew by 31% and 57% CAGR, respectively

in FY07‐12 period. We believe that TTKP’s top‐ and bottom‐lines to maintain

25% CAGR in FY12‐14E period. At CMP of Rs. 3,787, the stock trades at 31.1x

and 24.4x of FY13E and FY14E EPS, respectively. We believe the stock is

expensive at current levels amid slower growth and expected lower return

ratios. We initiate coverage on TTKP with “SELL” recommendation and a

target price of Rs. 3,173 per share, having 16% downside potential.

Key Financials

Y/E Mar (Rs mn) FY10 FY11 FY12 FY13E FY14E FY15E

Net Sales 5,079 7,636 11,034 14,092 17,351 21,168

EBIDTA 774 1,253 1,768 2,198 2,776 3,259

Net Profit 485 843 1,134 1,377 1,760 2,091

EPS (Rs) 42.8 74.5 100.1 121.6 155.5 184.7

PER (x) 88.5 50.8 37.8 31.1 24.4 20.5

EV/EBITDA (x) 54.8 33.8 24.0 19.3 15.3 13.0

ROE (%) 46.4 53.4 47.6 40.4 38.2 35.0

Source: Company & Karvy Institutional Research

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September 26, 2012

TTK Prestige

Shareholding pattern

Source: Bloomberg

Sales by Region – FY12

Source: Company

Promoter/Majority, 74.9

FIIs, 11.8 Banks/Fis/MFs, 3.4

Others, 0.9 Public, 9.0

South, 62%West, 15%

North and East, 20%

Exports, 3%

Company Background

TTK Prestige (TTKP) – a 57‐year old company – operates in

kitchen appliances industry. Its portfolio includes Pressure

Cookers, Pans, Non‐Stick Cookware, Gas Stoves, Induction

Cook‐tops, Rice Cookers and other kitchen electrical

appliances.

TTKP has evolved from a single product and South India

dominant company to “total kitchen appliances” company

with pan‐India presence. It has won many awards such as

“Super Brand”, “Master Brand” and “Star SME”.

TTKP has eight manufacturing facilities at Housur,

Coimbatore & Roorkee. The Company generated Rs. 11 bn

and Rs. 1.1 bn in sales and net income, respectively in FY12.

Its distribution network includes 356 PSK outlets and 30,000

retail outlets apart from institutions such as HPCL & BPCL.

Company Financial Snapshot Profit & loss

Rs. mn FY12 FY13E FY14E

Net revenues 11,034 14,092 17,351

EBIDTA 1,768 2,198 2,776

Other income 31 16 16

Interest 103 163 139

Depreciation 62 108 150

Profit Before Tax 1,632 1,943 2,502

Provision for tax 499 567 742

Adjusted Net Profit 1,134 1,377 1,760

Reported Net Profit 1,134 1,377 1,760

Profit and Loss Ratios

EBIDTA Margins (%) 16.0 15.6 16.0

PAT Margins (%) 10.3 9.8 10.1

EV/EBIDTA (x) 24.0 19.3 15.3

PER (x) 37.8 31.1 24.4

Dividend Payout (%) 15.0 17.0 22.0

Cash Flow


EBIT 1,705 2,090 2,625

(Inc)/Dec in working capital (181) (469) (334)

Cash flow from operations 1,525 1,621 2,291

Other income 31 16 16

Depreciation 49 108 150

Interest paid (103) (163) (139)

Dividends paid (197) (272) (450)

Tax paid (499) (567) (742)

Net cash from operations 805 744 1,126

Capital expenditure (1,540) (1,100) (300)

Free Cash Flows (735) (356) 826

Inc/(Dec) in LT borrowing 154 353 (550)

Inc/(Dec) in ST borrowing 11 135 (160)

Cash from Financial Activities 165 487 (710)

Opening Cash 535 223 286

Closing Cash 223 286 402

Change in Cash (312) 63 116

Balance Sheet


Shareholders’ funds 2,851 3,956 5,266

Total Loans 223 710 ‐

Deferred tax liability 68 ‐ ‐

Total Liabilities & Equity 3,142 4,666 5,266

Net block 1,507 2,896 3,164

Capital WIP 794 397 278

LT loans and advances 97 138 123

Investments 4 4 4

Net current assets 741 1,232 1,697

Deferred expenditure 0 ‐ ‐

Total Assets 3,142 4,666 5,266

Balance Sheet Ratios

Fixed assets turnover ratio

(x) 11.5 6.4 5.7

ROCE (%) 46.0 37.9 37.2

ROE (%) 47.6 40.4 38.2

Net Debt/Equity (x) (0.00) 0.11 (0.08)

EV/Sales (x) 3.9 3.1 2.4

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September 26, 2012

TTK Prestige

Outlook &Valuation

At CMP of Rs. 3,787 per share, the stock trades at P/E multiple of 31.1x and 24.4x of

FY13E & FY14E EPS, respectively. We value TTKP’s core business at Rs. 3,109

(20xFY14E EPS) and its realty at Rs. 64. Hence our target price comes to Rs. 3,173

per share, having 16% potential downside. As we believe the stock is overvalued

at the current levels, we initiate coverage on TTK Prestige with “SELL”

recommendation.

DCF – FCFE Valuation: We valued TTKP using Free Cash Flow to Equity (FCFE)

method to substantiate our FY14E P/E multiple of 20. We have assumed over 20%

growth in top‐line until FY17E and growth in high teens thereafter till FY22E. We

have also assumed that TTKP’s EBITDA margin will be compressed by 200 bps

over FY14E‐22E, with the rise in proportion of kitchen electrical appliances and

higher outsourcing. The FCFE method substantiates our FY14E P/E multiple of 20

for TTKP’s core operations.

Exhibit 1: DCF Valuation using Free Cash Flow to Equity – TTK Prestige

(mn) FY13E FY14E FY15E FY16E FY17E FY18E FY19E FY20E FY21E FY22E

Revenue 14,092 17,351 21,168 25,591 30,709 36,237 42,760 49,174 56,550 65,032

EBITDA 2,198 2,776 3,259 3,812 4,513 5,253 6,113 6,932 7,859 8,973

EBIT 2,090 2,625 3,055 3,578 4,268 5,000 5,814 6,588 7,463 8,517

Depreciation – (b) 108 150 204 234 246 254 299 344 396 455

Interest/Bank Charges 163 139 75 89 107 129 155 186 223 267

Tax 567 742 916 1,093 1,288 1,508 1,752 1,982 2,314 2,637

Other Income 16 16 26 42 54 71 92 119 143 158

Net Income – (a) 1,372 1,755 2,083 2,425 2,910 3,412 3,971 4,503 5,024 5,721

EBITDA Margin (%) 15.6 16.0 15.4 14.9 14.7 14.5 14.3 14.1 13.9 13.8

EBIT Margin (%) 14.8 15.1 14.4 14.0 13.9 13.8 13.6 13.4 13.2 13.1

Tax Rate (%) 29.2 29.7 30.5 31.0 31.0 31.0 31.0 31.0 32.0 32.0

Change in WC – (c) 469 334 825 1,039 349 472 525 497 543 590

Capex – (d) 1,100 300 400 400 369 355 419 482 554 637

Change in Debt – (e) 487 (710) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

FCFE – (a+b‐c‐d+e) 398 561 1,062 1,220 2,438 2,838 3,327 3,868 4,323 4,949

Terminal FCFE 87,431

Total FCFE 398 561 1,062 1,220 2,438 2,838 3,327 3,868 4,323 92,380

Discounted FCFE ‐ 481 780 768 1,314 1,311 1,317 1,312 1,257 23,011

Cost of Equity (%) 16.7

Terminal Cost of Equity (%) 12.0

Terminal Growth Rate (%) 6.0

Intrinsic Value – (FY14E onwards) 31,953

Number of Shares (Mn) 11.3

Value per Share excl. RE* Value (Rs) 2,823

Implied P/E Multiple 18.2

Terminal FCFE/Intrinsic Value (%) 69

Source: Company & Karvy Institutional Research; * RE: Real Estate

4

September 26, 2012

TTK Prestige

Peer Comparison Though the business model of TTK Prestige is not strictly comparable with those

of Hawkins, Butterfly Gandhimati Appliances (BGA), Bajaj Electricals (BJEL) &

Havells, they operate in same space with different set of products. However, we

have provided valuation data for other consumption related companies.

TTKP commands higher P/E multiples than Havells and BJEL, as the former

generates higher EBITDA margins, returns rates and top‐line growth. TTKP’s

multiple premium will reduce in the medium to long‐term as it generates more

revenue from Kitchen Electrical Appliances (KEA) segment, which consists of

major players such as Havells, BJEL, V‐Guard, Panasonic and Philips/Preeti.

A. Multiples Greater than Peers

Currently, the TTKP P/E ratio is similar to that of Page Industries and discount to

Jubilant FoodWorks. However, we believe that TTKP may not get P/E ratios

similar to that of Page Industries and Jubilant FoodWorks, as the shelf‐life of

TTKP’s products is 3‐5 years, while the life‐spans of Page and Jubilant products

are a few months and a few hours respectively.

Exhibit 2: Peer Valuation Table

CMP P/E (x) EPS Growth (%) EBIDTA Margin (%) EV/EBIDTA (x) Price/Sales (x)

(Rs) FY13E FY14E FY13E FY14E FY13E FY14E FY13E FY14E FY13E FY14E

TTK Prestige 3,787 31.1 24.4 21.4 27.8 15.6 16.0 19.3 15.3 3.04 2.47

Bajaj Electricals 201 15.6 11.9 9.3 30.5 7.8 8.4 8.1 6.8 0.56 0.49

Havells India 621 17.6 14.9 19.1 18.4 10.5 10.9 11.0 9.4 1.07 0.98

Other Consumption Based Companies

Page Industries* 3,207 31.3 24.4 27.0 28.3 20.2 20.3 19.6 15.2 4.12 3.23

Jubilant FoodWorks* 1,299 54.6 38.8 45.8 40.6 18.8 19.2 27.5 19.9 5.90 4.35

Source: Bloomberg & Karvy Institutional Research

Our View: The KEA segment is more competitive as no single player commands

over 20% market share in any of the products that they operate, whereas TTKP

& Hawkins together constitute 80% of the market share in pressure cookers.

B. Returns to Decline due to Lower Asset Turnover and EBIT

Margin

TTKP has generated ~45‐55% ROE in the last three years due to higher outsourcing

and in turn higher asset turnover.

Exhibit 3: DuPont Analysis

DuPont Analysis FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E FY16E

Tax Burden (%) 59.3 70.9 82.0 77.2 67.8 69.7 69.4 70.8 70.3 69.5 69.0

Interest Burden (%) 64.5 67.3 69.6 79.9 95.4 96.5 94.0 92.3 94.7 97.6 97.5

EBIT Margin (%) 8.4 8.7 9.3 9.0 14.7 16.3 15.7 14.9 15.2 14.5 14.1

Total Asset T/O 2.1 2.4 2.6 3.5 4.3 4.6 4.3 3.6 3.5 3.5 3.4

Financial Leverage 2.2 2.3 2.0 1.5 1.1 1.0 1.1 1.1 1.1 1.0 1.0

ROE (%) 15.0 23.0 28.0 29.2 46.4 53.4 47.6 40.4 38.2 35.0 32.5

Source: Company, Karvy Institutional Research

Our View: TTKP may not be able to enjoy the similar asset turnovers – due to

recent capex – and lower EBIT margin, which will lead to lower ROE, going

forward.

5

September 26, 2012

TTK Prestige

Rationale for “SELL” Recommendation

Our investment thesis is based on following premises:

1. Improvement in Market Share to Take a Breather

2. Our Distributor Survey Reveals Substantial Volume Degrowth across Segments

3. Competitive Advantage in Pressure Cookers may not be extended to KEA

4. Six‐Cylinder Policy may not Hike Induction Cook‐top Sales

5. Capacity Constraints to Recede EBITDA Margins from FY15E‐onwards

6. Kitchen Electrical Appliances to Drag Margins

7. International Collaborations

8. US Patent Boost Export of Microwave Pressure Cookers

9. Distribution Network in non‐Southern India needs Improvement

1. Improvement in Market Share to Take a Breather In organized pressure cookers segment, the market share of TTK Prestige (TTKP)

has increased by 8% in last five years. TTKP & Hawkins dominate this segment

with combined market share of 75‐80%. While the volume of TTKP’s pressure

cookers has grown by 23% CAGR in FY07‐11, Hawkins recorded volume growth

at 14% CAGR. TTKP has gained market share from Hawkins due to capacity

constraints at the latter due to issues relating to pollution and labor matters.

Hawkins currently runs at a capacity utilization of ~45% due to the above issues.

Our distributor survey has indicated that Hawkins could not meet the demand in

South India despite consistent demand from distributors and dealers. Hawkins

informed that it resolved the labor issues by reaching an agreement with labor

union, but the Company is yet to resolve pollution issues raised by Punjab

Pollution Control Board.

Our View: TTK Prestige will lose some market share to Hawkins once the latter

resolves its pollution issues and increases production.

2. Our Distributor Survey Reveals Substantial Volume

De‐growth across Segments We have surveyed TTKP distributors in major cities i.e. Chennai, Bangalore,

Hyderabad, New Delhi and Mumbai to gauge the growth rates of major products.

Chennai: The volume growth rate in Pressure Cookers and KEA has been

high‐single digits and high‐teens respectively. Credit terms for the Pressure

Cookers and KEA are 0‐15 days and 30‐60 days respectively.

Bangalore: The volume growth rate in Pressure Cookers and KEA has been

mid‐single digits and 10%, respectively. Credit terms for Pressure Cookers and

KEA are 15‐30 days and 30‐60 days respectively. It is also revealed that

intensifying competition leads to margin compression.

Hyderabad: The volume growth rate in Pressure Cookers and KEA has been

mid‐single digits and teens respectively. Credit terms for Pressure Cookers &

KEA are 0‐7 days and 30‐45 days respectively.

New Delhi: The growth rate in Pressure Cookers and KEA has been high‐

teens. Credit terms for Pressure Cookers & KEA are 0‐30 days and 30‐45 days,

respectively.

Mumbai: The credit terms for Pressure Cookers & KEA are 30‐60 days.

Hawkins and Nirali are the leaders in Pressure Cookers and Non‐Stick

Cookware respectively.

Our View: The survey reveals that the

volume growth in Pressure Cookers &

Non‐Stick Cookware decelerated to high‐

single digits, & the volume growth in KEA

– including induction cook‐tops –

decreased to teens.

India’s Consumer Appliances

Sector to Sustain Double‐digit

Growth

India’s consumption is poised to

grow at a faster pace in coming

years, driven by favourable

demographics and higher

disposable incomes. The domestic

consumer appliances sector is quite

attractive due to the extraordinarily

low levels of penetration. We

believe that the macroeconomic

conditions would provide a strong

boost to the consumer appliances

sector, going forward.

Please refer to our Thematic Report

“Consumer Appliances: Rising

Affluence & Favourable

Demographics”, dated 12th Apr’12.

6

September 26, 2012

TTK Prestige

A. Growth cools‐off in Induction Cook‐tops, Highest Growth Product: Our survey has revealed that the volume growth rate for Induction Cook‐tops – which

has been growing over 100% in last three years and contributing ~15% to TTKP’s

total revenue in FY12 – has cooled‐off to 20%. The survey has also indicated that

lack of power supply and rise in power‐cost have reduced sales of Induction Cook‐

tops to some extent. Volume growth rates in the rest products in KEA segment

have also declined to mid‐teens.

B. Relaxed Credit Terms in KEA Segment to Increase Debtors: We learnt that

TTKP provides 0‐30 days credit on products i.e. Pressure Cookers & Non‐Stick

Cookware. However, TTKP has relaxed credit days of 30‐60 on KEA, as the

Company is not the market leader in the segment. Moreover, TTKP provides 0‐15

days of credit on Pressure Cookers in South India and 15‐30 days in non‐South

India, where the Hawkins is the market leader in Pressure Cookers.

3. Competitive Advantage in Pressure Cookers may not

be extended to KEA Segment We believe TTKP may not be able to enjoy similar competitive benefit in KEA

segment as it enjoys in Pressure Cooker segment, as it is the leader with 40%

market share in latter segment while competing with players i.e. Havells, Bajaj

Electricals, Panasonic and Preeti/Philips in the former segment. TTKP is a market

leader in Induction Cook‐tops with 20% market share while its market share in

products in KEA segment is in high‐single digits. TTKP outsources most of its

KEAs, especially where it does not have technical expertise. Moreover, the

organized pressure cooker market is closer to duopoly whereas KEA segment

markets represent oligopolies.

4. Six‐Cylinder Policy may not Aid Induction Cook‐top

Sales Growth Government of India (GoI) has recently issued a policy statement that it would

provide six cylinders to each family on subsidized prices and remaining cylinders

will be sold at market prices. We believe the implementation of the above policy

may not boost induction cook‐top sales to a great extent due to the following

reasons.

Congress Party has asked state governments, which are ruled by their party, to

increase number of subsidized cylinders from 6 to 9.

TTK Prestige generates 62% of sales from South India, which is a power

deficient region. Percentage of Non‐South India sales has not increased much

during the last three years.

Power cuts are in the range of 1‐3 hours during peak hours ‐ which is also

cooking time ‐ in Hyderabad and Chennai. Tier‐II/III cities experience power

cuts in the range of 5‐6 hours during peak hours. The situation will even

worsen in summers.

South India’s power supply deficit has increased to 16% in August 2012 as

against 4% in August 2011.

Power situation in South India may not be improved in next two years due to

coal supply issues and state governments have not increased power

generation capacities in the recent past.

Power supply to South India from rest of the country is limited by power

transmission constraints, which cannot be improved until January 2014.

Our View: TTKP’s growth in KEA

segment will decline to ~30% in FY12‐15E

from 65% CAGR in FY08‐12.

Our View: TTKP’s debtors will rise

significantly with the rise in revenue

share – as a percentage of total sales – of

KEA segment and non‐South India.

7

September 26, 2012

TTK Prestige

Prospective Induction cook‐top buyers need to buy a new set of utensils along

with induction cook‐tops.

Exhibit 4: Power Deficit Situation in South‐India

Power Deficit (%) Aug 12 Aug 11 Apr‐Aug 12 Apr‐Aug 11

Andhra Pradesh 20.9 0.3 15.1 8.4

Karnataka 16.2 7.3 13.1 11.4

Tamil Nadu 14.0 4.4 14.6 11.3

Kerala 2.2 3.4 3.1 8.0

Southern Region 16.0 4.4 13.4 7.2

Source: Ministry of Power, GoI

5. Capacity Constraints to Recede EBITDA Margins from

FY15E‐onwards TTKP has been on capex drive since FY11 and spent Rs. 1.9 bn until Q4FY12, while

the Company mulls spending another Rs. 1.1 bn in FY13E to double its annual

non‐stick cookware capacity to 12 mn pieces and increase the annual induction

cook‐tops capacity to 1 mn pieces. It also plans to spend Rs. 200 mn in FY14E as

maintenance capex. TTKP generates an EBITDA margin of ~19% on in‐house

manufactured products and ~12% on outsourced products.

Our View: TTKP’s capacity utilization will peak by FY14E, as in its drive to boost

sales it has to hike in‐house capacity or rely on outsourcing after FY14E. While

the 1st option will lead to decreased free cash flows, increased debt levels,

depreciation and interest and the 2nd option will result in decreased EBITDA

margin. Both the options will adversely impact TTKP’s PAT margins, cash flows,

return ratios and valuations from FY15E onwards.

Exhibit 5: In‐house/Outsourced manufacturing information

Product Segment Remarks

Pressure Cookers

& Pans

In‐house Mfg: TTKP has expanded production capacity to 8 mn, which we believe is sufficient until FY14E. The

Company has to either increase mfg capacity or outsource mfg to meet demand from FY15E onwards

Non‐stick

Cookware

In‐house & Outsourced Mfg till FY12: TTKP has expanded production capacity to 6 mn in FY12E and will be further

expanded to 12 mn by FY13E. We believe the Company has to either increase mfg capacity or outsource mfg to meet

demand from FY15E onwards

Gas Stoves Outsourced Mfg:

Kitchen Electrical

Appliances

Outsourced Mfg till FY12: TTKP has built mfg facility for induction cook‐tops for ~1 mn pieces, and it plans to outsource

a portion of induction cook‐tops. Other products i.e. Mixers/Grinders, Juicers, and Kettles will be outsourced


Exhibit 6: Installed Capacity (mn)

Product Segment FY09 FY10 FY11 FY12 FY13E FY14E FY15E FY16E

Pressure Cookers 4.0 4.8 4.8 8.0 8.0 8.0 8.0 8.0

Nonstick Cookware 1.8 2.0 2.0 6.0 12.0 12.0 12.0 12.0

Induction Cook‐tops NA NA NA NA 1.0 1.0 1.0 1.0


Exhibit 7: Sales Volume (mn) Product Segment FY09 FY10 FY11 FY12 FY13E FY14E FY15E FY16E



Induction Cook‐tops NA NA NA 0.9 1.2 1.6 2.0 2.7


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September 26, 2012

TTK Prestige

Exhibit 8: Production (mn)






Exhibit 9: Capacity Utilization (%)






Exhibit 10: Outsourcing Percentage (%)

Product Segment FY09 FY10 FY11 FY12 FY13E FY14E FY15E FY16E Remarks

Pressure Cookers ‐ 2.1 ‐ ‐ ‐ ‐ 9.4 21.2 Need Capex in FY14E.

Nonstick Cookware ‐ 11.6 52.0 ‐ ‐ ‐ ‐ 8.5 Need Capex in FY15E.

Induction Cook‐tops NA NA NA NA 33.9 49.2 60.9 69.9Recent Capex is not good enough for 100% in‐

house manufacturing of induction cook‐tops.


Impact of Higher Capex & Outsourcing on Margins: TTKP has to spend Rs. 3‐3.5

bn in FY14‐15E to maintain 100% in‐house manufacturing in Pressure Cooker &

Non‐Stick Cookware segments. It has to raise Rs. 2.5 bn to meet the capex plan, but

interest on new loan coupled with higher depreciation will drag its PAT margins

by 80 bps. Moreover, ~45‐50% of sales have to be outsourced from FY14‐FY15E

onwards in case TTKP won’t undertake the afore‐mentioned capex. We believe

that the expected higher outsourcing will reduce TTKP’s EBITDA & PAT

margins by ~100 bps and ~70 bps, respectively.

6. Kitchen Electrical Appliances to Drag Margins TTKP generates an EBITDA margin of ~19% on in‐house manufactured products

and ~12% on outsourced products. TTKP’s sales in Kitchen Electrical Appliances

(KEA) segment have been outgrowing its rest segments and we believe the

Company will be able to continue the same in future. TTKP’s outsourcing

percentage would increase after FY14E as it doesn’t make much economical sense

to invest in capacity for small KEA segment.

Exhibit 11: Revenue Contribution Percentage of each Segment

Revenue Contribution (%) FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E FY16E Comment

Pressure cookers 55 53 47 41 37 36 34 33 32 Needs capex in FY14E

Nonstick cookware 16 15 17 20 20 19 19 19 19 Needs capex in FY15E

Gas Stoves 10 10 12 10 9 8 8 7 6 Outsourced

Kitchen Electrical Appliances 14 17 20 25 31 35 37 40 41 Major portion of induction cook‐tops and rest of

kitchen electrical appliances are outsourced

Other 5 5 4 3 3 2 2 1 1 Outsourced


Our View: The expected EBITDAM of

16.0% in FY14E will be the highest margin

that TTKP will achieve with latest capex

and current trend of raw material prices.

Our View: TTKP’s outsourcing percentage

will increase with the rise in sales in KEA

segment. Higher outsourcing will decrease

EBITDA margins of the company.

9

September 26, 2012

TTK Prestige

7. International Collaborations TTKP has tied‐up with various MNCs to introduce new products in India through

co‐branding to leverage its distribution network.

Alliance with US‐based World Kitchen: Through this alliance TTKP will

introduce high‐end Tableware/Cookware & Storeware with Prestige logo.

Alliance with Germany‐based Schott AG: TTKP has launched gas stoves

made from Schott tempered flat glass and an induction cook‐top with glass‐

ceramic cook‐tops.

Alliance with Switzerland‐based Vestergaard Frandson Group: Through this

alliance TTKP will manufacture and market water filters across India.

Water Filter Market: Water Purifier market – estimated to be Rs. 16 bn – is

dominated by players i.e. Hindustan Unilever, Kent Healthcare, Tata Chemicals

and Eureka Forbes. The market is set for tough competition as the biggies such as

Godrej, Panasonic and LG are also gearing up to take on the existing players.

8. US Patent to Boost Export of Microwave Pressure

Cookers in FY13E TTKP has received US patent for Microwave Pressure Cookers recently and has

been exporting the same to the US, Japan, the UK, Germany, France, China, Korea

and Middle‐East. It Management expects to increase export quantity from 0.17 mn

in FY12 to 0.8 mn pieces in FY13E.

Our View: The rise in exports will boost TTKP’s pressure cooker sales by 8%,

while its overall sales would grow by 3% in FY13E. TTKP’s exports – as a

percentage of sales – will rise to 6% in FY13E from 3% on FY12.

9. Distribution Network in non‐South India needs

Improvement TTKP has a total retail network of 30,000 outlets. It has multiple distribution

channels i.e. traditional retail outlets, modern trade formats, own retail outlets,

hyper/super markets and institutions such as HPCL, BPCL and military canteens.

Exhibit 12: TTK Prestige Distribution Structure


Branded Retail Outlets: TTKP has also increased its own branded retail outlets i.e.

Prestige Smart Kitchen (PSK) that covers 21 states and 179 towns in India. The

number of PSK outlets increased to 356 in FY12 from 51 in FY05.

Our View: It will be difficult for TTKP to

gain notable market share in water

purifier segment amid intense competition

from the market leaders.

Sales by distribution channel –

FY11


Sales by region – FY12


Traditi

onal

Retail,

63%

Moder

n

Trade,

10%

Own

Retail,

15%

Institut

ions,

12%

South,

62%

West,

15%

North

and

East,

20%

Export

s, 3%

10

September 26, 2012

TTK Prestige

Exhibit 13: Number of Prestige Smart Kitchen (PSK) Outlets


Our View: While TTKP has strong distribution network in South, its distribution

network in non‐South India needs improvement. Its KEA segment competes with

major players i.e. Bajaj Electricals (BJEL) and Havells who having networks

consisting of 55,000 and 45,000 outlets. BJEL is spread across India and Havells

presence is strong in Northern, Eastern and Southern parts. Hawkins, TTKP’s

competitor in pressure cookers, has developed its forte in West and North India.

Karvy vs. Consensus Exhibit 14: Karvy vs. Consensus

EPS Sales Growth (%) EBITDA Growth (%) NI Growth (%) EBITDA Margin (%) NI Margin (%)

FY13E FY14E FY13E FY14E FY13E FY14E FY13E FY14E FY13E FY14E FY13E FY14E

Karvy 121.6 155.5 27.7 23.1 24.4 26.3 21.4 27.8 15.6 16.0 9.8 10.1

Consensus* 128.4 166.8 30.3 26.1 23.9 28.5 28.4 30.2 15.4 15.7 10.1 10.5

Difference (6.8) (11.4) (2.6) (3.0) 0.5 (2.2) (7.0) (2.4) 0.2 0.3 (0.4) (0.3)

Source: Company & Karvy Institutional Research, * Bloomberg

0

50

100

150

200

250

300

350

400

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Number of PSK Outlets

11

September 26, 2012

TTK Prestige

Key Assumptions & Estimates Exhibit 15: Key Assumptions & Estimates

Key Financials Estimates Growth (%) Comments

(Rs mn) FY11 FY12 FY13E FY14E FY15E FY12 FY13E FY14E FY15E

Revenue by Product

Pressure cookers & Pans 3,169 4,132 5,124 6,046 7,134 30.4 24.0 18.0 18.0 Market leadership, strong brand‐equity and

exports

Non Stick Cookware 1,540 2,247 2,764 3,399 4,079 45.9 23.0 23.0 20.0 Rising middle class, strong branding to sustain

growth

Gas Stoves 808 1,008 1,160 1,334 1,467 24.7 15.0 15.0 10.0

Kitchen Appliances 1,929 3,494 4,752 6,178 8,031 81.1 36.0 30.0 30.0 Slow down in induction cook‐tops & KEA.

New JVs ‐ ‐ 250 400 520 60.0 30.0 Introduction of new products from JVs.

Others 266 280 288 297 306 5.5 3.0 3.0 3.0

Net Revenues 7,636 11,034 14,092 17,351 21,168 44.5 27.7 23.1 22.0

EBITDA

EBITDA 1,253 1,768 2,198 2,776 3,259 41.0 24.4 26.3 17.4 With rise in outsourced mfg, margin to dip by 40

bps in FY13E & rise by 40bps in FY14E with rise

in in‐house mfg. EBITDA (%) 16.4 16.0 15.6 16.0 15.4

Depreciation 43 62 108 150 204 46.5 72.8 39.2 36.1

Other income 43 31 16 16 26 (28.4) (48.7) ‐ 63.2

EBIT 1,254 1,736 2,106 2,641 3,081 38.5 21.3 25.4 16.6

Interest Expense 44 103 163 139 75 133.7 57.3 (14.3) (46.5) Interest expense will rise as TTKP raises debt in

FY13E to meet capex requirements.

Adjusted PBT 1,209 1,632 1,943 2,502 3,006 35.0 19.0 28.8 20.2

Tax 366 499 567 742 916 36.3 13.6 31.0 23.4

Tax rate 30.3 30.6 29.2 29.7 30.5

Reported net profit 838 1,134 1,377 1,760 2,091 35.4 21.4 27.8 18.8

Net Profit (%) 11.0 10.3 9.8 10.1 9.9

CFO – (a) 500 841 676 1,126 790

CFI – (b) (212) (1,540) (1,100) (300) (400) TTKP will spend Rs. 1.11 bn in FY13E; It will

resort to maintenance capex in FY14E

FCF – (a+b) 288 (699) (424) 826 390 Cash proceeds will be used to repay debt and

invest in liquid assets CFF – (c) (192) 387 487 (710) (250)

Total Change in Cash 96 (312) 63 116 140


Key Risks

Up‐side Risks:

Decline in Commodity Prices amid Stronger INR: Any decrease in aluminum

prices and stronger INR might increase the margins and profitability of the

Company.

Success of Newly‐launched Products: TTKP has tied‐up with various MNCs

to introduce new products in India. Hence success of these newly launched

products will be catalyst for TTKP’s growth.

Significant Incremental Export Volume: TTKP has received US patent for

Microwave Pressure Cooker and hence any significant incremental rise in

export volume will also boost profitability of the Company.

Down‐side Risks:

Intense Competition: Intense competition in consumer‐related business units

may impact TTKP’s profit margins, as the barriers to entry in the industry are

low.

Extended Slowdown in Domestic Economy: Continued slow growth in

India’s GDP might reduce TTKP’s growth prospects.

12

September 26, 2012

TTK Prestige

Financial Overview

A. Lower Growth in KEA Segment to Drag Top‐line

Growth

TTKP’s revenue grew by ~50% CAGR in the last two years led by Kitchen

Electrical Appliances (KEA) with CAGR of 83%, while the sales of Induction Cook‐

tops quadrupled. The KEA segment has increased its share of revenues from 20%

in FY10 to 31% in FY12.

Exhibit 16: Revenue Growth Rates (%)


Our View: TTKP’s top‐line growth rate will decline to 24% CAGR in FY12‐15E, as

the sales of Induction Cook‐tops and other appliances decrease to high‐teens.

B. Asset Turnover Ratio to Decrease due to Capex TTKP has increased its Asset Turnover Ratio from 3.5 in FY09 to 4.3 in FY12

through high revenue growth, increased capacity utilization and outsourced

manufacturing.

Exhibit 17: Revenue & Asset Turnover


Our View: The Asset Turnover Ratio will decrease to 3.5 by FY14E due to recent

and proposed capital investments in FY12 & FY13E and reduced reliance on

outsourced manufacturing.

‐

10

20

30

40

50

60

70

80

90

100

FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E

Kitchen Electrical Appliances Company Revenue Growth

4,013 5,079 7,636 11,034 14,092 17,351 21,168

3.5

4.3 4.6

4.3

3.6 3.5 3.5

0.0

1.0

2.0

3.0

4.0

5.0

‐

5,000

10,000

15,000

20,000

25,000


Revenue Asset Turnover

13

September 26, 2012

TTK Prestige

C. TTKP to Reach EBITDA Margin Overhang in FY14E TTKP’s EBITDA margin grew by 660 bps to 16.4% in FY09‐11, while its margin

decreased by 40 bps in FY12 due to higher outsourcing and raw material prices.

TTKP’s margin is likely to decrease further by 40 bps in FY13E and rise by 40 bps

to 16.0% in FY14E due to the ongoing capital investments, which will increase in‐

house manufacturing and in‐turn the margin.

Exhibit 18: EBITDA & EBITDA Margin

Source: Company& Karvy Institutional Research

Our view: TTKP will be able to report highest margin in FY14E with the on‐going

capital investments, and the Company needs to invest in new capacities to meet

growing demands for Pressure Cookers & Non‐Stick Cookware from FY15E

onwards. EBITDA Margin will decrease from FY15E as the outsourcing from KEA

and/or Pressure Cooker segments & Non‐stick Cookware increase.

D. Net Income Margin to Reduce in FY13E TTKP’s net income margin grew by 480 bps to 10.3% in FY09‐12, which is likely to

decline by 50 bps to 9.8% in FY13E due to compression in EBITDA margin, higher

depreciation and interest.

Exhibit 19: Net Income & Net Income Margin


393 774 1,253 1,768 2,198 2,776 3,259

9.8

15.2

16.4 16.0 15.6

16.0 15.4

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

‐

500

1,000

1,500

2,000

2,500

3,000

3,500


EBITDA EBITDA Margin

224 524 838 1,134 1,377 1,760 2,091

5.6

10.3 11.0

10.3 9.8 10.1 9.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

‐

500

1,000

1,500

2,000

2,500


Net Proft Net Profit Margin

Our view: The net profit margin will

decline from FY15E onwards, as the

capacity utilization will peak by FY14E.

In its drive to boost sales, TTKP has to

hike in‐house capacity or rely on

outsourcing after FY14E. While the 1st

option will lead to decreased free cash

flows, increased debt levels, depreciation

and interest and the 2nd option will result

in decreased EBITDA margin. Both the

options will adversely impact TTKP’s

PAT margins, cash flows, return ratios

and valuations from FY15E onwards.

14

September 26, 2012

TTK Prestige

E. ROCE & ROE to Decline due to On‐going Capex and

Lower EBIT Margin

TTKP’s ROCE & ROE have improved due to high Asset Turnover and increased

EBIT margins. We believe ROCE & ROE will decline going forward due to on‐

going investment in capex to reduce reliance on outsourced manufacturing.

Exhibit 20: Return Ratio (%)


Our View: The need for higher capital investment and rise in sales in KEA segment

will reduce ROCE & ROE, going forward.

24.3

42.0

51.1

46.0

37.9 37.2 35.6 32.9

29.2

46.4

53.4

47.6

40.4 38.2

35.0 32.5

‐

10.0

20.0

30.0

40.0

50.0

60.0

FY2009 FY2010 FY2011 FY2012 FY2013E FY2014E FY2015E FY2016E

ROCE ROE

15

September 26, 2012

TTK Prestige

Exhibit 21: Profit & Loss Statement

(Rs mn) FY10 FY11 FY12 FY13E FY14E FY15E

Net revenues 5,079 7,636 11,034 14,092 17,351 21,168

% Growth 26.6 50.3 44.5 27.7 23.1 22

Raw Material 2,686 4,409 6,644 8,484 10,228 12,374

Staff 393 530 730 960 1,217 1,527

Operating Expenses 1,227 1,443 1,893 2,450 3,130 4,009

Operating expenses 4,306 6,382 9,267 11,894 14,575 17,909

EBIDTA 774 1,253 1,768 2,198 2,776 3,259

Growth (%) 97 62 41 24.4 26.3 17.4

EBIDTA margin (%) 15.2 16.4 16 15.6 16 15.4

Other income 11 43 31 16 16 26

Interest 35 44 103 163 139 75

Depreciation 36 43 62 108 150 204

Profit Before Tax 714 1,209 1,632 1,943 2,502 3,006

Provision for tax 230 366 499 567 742 916

Effective tax rate (%) 32.2 30.3 30.6 29.2 29.7 30.5

Adjusted Net Profit 485 843 1,134 1,377 1,760 2,091

% Growth 116.5 74 34.4 21.4 27.8 18.8

Reported Net Profit 524 838 1,134 1,377 1,760 2,091


Exhibit 22: Balance Sheet

(Rs. mn) FY10 FY11 FY12 FY13E FY14E FY15E

Equity capital 113 113 113 113 113 113

Reserves & surplus 1,128 1,801 2,738 3,843 5,152 6,563

Shareholders’ funds 1,242 1,915 2,851 3,956 5,266 6,676

Short term Loans ‐ 14 26 160 ‐ ‐

Long Term Loans 28 43 197 550 ‐ ‐

Total Loans 28 58 223 710 ‐ ‐

Deferred tax liability 31 33 68 ‐ ‐ ‐

Total Liabilities and Equity 1,301 2,005 3,142 4,666 5,266 6,676

Gross block 835 892 2,029 3,525 3,945 4,428

Depreciation 430 473 522 630 780 985

Net block 405 419 1,507 2,896 3,164 3,443

Capital WIP 235 391 794 397 278 194

Investments 4 4 4 4 4 4

LT Loans and Advances ‐ 119 97 138 123 126

Inventory 613 1,050 1,749 2,216 2,651 3,415

Debtors 603 747 1,060 1,411 1,771 2,204

Cash & Bank Balance 440 535 223 286 402 542

Current Assets 2,081 3,322 4,435 5,573 6,704 8,723

Sundry Creditors 266 380 684 830 1,001 1,219

Other current liabilities 1,158 1,869 3,010 3,511 4,005 4,595

Current Liabilities 1,424 2,250 3,694 4,341 5,007 5,814

Net current assets 657 1,072 741 1,232 1,697 2,909

Total Assets 1,301 2,005 3,142 4,666 5,266 6,676


16

September 26, 2012

TTK Prestige

Exhibit 23: Cash Flow Statement

(Rs mn) FY10 FY11 FY12 FY13E FY14E FY15E

EBIT 738 1,211 1,705 2,090 2,625 3,055

(Inc.)/Dec in working capital 159 ‐217 ‐181 ‐469 ‐334 ‐825

Cash flow from operations 897 994 1,525 1,621 2,291 2,230

Other income 11 43 31 16 16 26

Depreciation 34 43 49 108 150 204

Interest paid (‐) ‐35 ‐44 ‐103 ‐163 ‐139 ‐75

Tax paid (‐) ‐230 ‐366 ‐499 ‐567 ‐742 ‐916

Dividends paid (‐) ‐132 ‐164 ‐197 ‐272 ‐450 ‐680

Deferred Tax Liability 0 1 36 ‐68 ‐ ‐

Extraordinaries 40 ‐6 ‐ ‐ ‐ ‐

Net cash from operations 586 500 841 676 1,126 790

Capital expenditure (‐) ‐79 ‐212 ‐1,540 ‐1,100 ‐300 ‐400

Net cash after capex 507 288 ‐699 ‐424 826 390

Inc./(Dec.) in short‐term borrowing ‐ 14 11 135 ‐160 ‐

Inc./(dec.) in long‐term borrowing ‐179 15 154 353 ‐550 ‐

Inc./(dec.) in borrowings ‐179 30 165 487 ‐710 ‐

(Inc.)/Dec. in investments ‐ ‐222 222 ‐ ‐ ‐250

Equity issue/(Buyback) 3 0 ‐ ‐ ‐ ‐

Cash from Financial Activities ‐176 ‐192 387 487 ‐710 ‐250

Opening cash 109 440 535 223 286 402

Closing cash 440 535 223 286 402 542

Change in cash 331 96 ‐312 63 116 140


Exhibit 24: Key Ratios

FY10 FY11 FY12 FY13E FY14E FY15E

Raw Material Cost / Sales (%) 52.9 57.7 60.2 60.2 58.9 58.5

Manpower Cost / Sales (%) 7.7 6.9 6.6 6.8 7 7.2

Operating & Other cost / Sales (%) 24.1 18.9 17.2 17.4 18 18.9

Revenue Growth (%) 26.6 50.3 44.5 27.7 23.1 22

EBIDTA Margins (%) 15.2 16.4 16 15.6 16 15.4

Net Income Margins (%) 9.5 11 10.3 9.8 10.1 9.9

ROCE (%) 42 51.1 46 37.9 37.2 35.6

ROE (%) 46.4 53.4 47.6 40.4 38.2 35


Exhibit 25: Key Ratios

FY10 FY11 FY12 FY13E FY14E FY15E

EPS (Rs) 42.8 74.5 100.1 121.6 155.5 184.7

P/E (x) 88.5 50.8 37.8 31.1 24.4 20.5

BV (Rs) 109.7 169.2 251.9 349.5 465.2 589.8

P/BV (x) 34.5 22.4 15 10.8 8.1 6.4

EV/EBIDTA (x) 54.8 33.8 24 19.3 15.3 13

Fixed assets turnover ratio (x) 13.3 18.5 11.5 6.4 5.7 6.4

Debt/Equity (x) 0.02 0.03 0.08 0.18 ‐ ‐

EV/Sales (x) 8.4 5.6 3.9 3.1 2.4 2


Institutional Equities Team Rangachari Muralikrishnan

Head – Institutional Equities /

Research / Strategy +91‐22 61844301 [email protected]

Shridhar Iyer Head ‐ Institutional Sales +91‐22 61844302 [email protected]

K. Anant Rao Head ‐ Sales‐Trading & Derivatives +91‐22 61844303 [email protected]

Uday Raval Karvy Inc. USA +1 212 2674334 [email protected]

INSTITUTIONAL RESEARCH

Analysts Industry / Sector Desk Phone Email ID

Dwaipayan Poddar Chief Technical Strategist +91‐22 61844372 [email protected]

Hatim Broachwala, CFA Banking +91‐22 61844329 [email protected]

Jagadishwar Pasunoori, CFA, FRM MidCap +91‐40‐44857912 [email protected]

Manoj Kumar Manish Derivatives Research +91‐22 61844327 [email protected]

Maruti Kadam Automobiles / Metals & Mining +91‐22 61844326 [email protected]

Mitul Shah Automobiles +91‐22 61844312 [email protected]

Nishith Sanghvi Pharmaceuticals +91‐22 61844325 [email protected]

Naveen Trivedi FMCG +91‐22‐61844316 [email protected]

Pallav Agarwal Metals & Mining +91‐22 61844317 [email protected]

Paresh Jain BFSI +91‐22 61844324 [email protected]

Parikshit Kandpal Infra / Real Estate / Strategy +91‐22 61844311 [email protected]

Rahul Sharma Pharmaceuticals +91‐22 61844310 [email protected]

Rahul Singh MidCap +91‐40‐44857912 [email protected]

Rajesh Kumar Ravi Cement & Logistics +91‐22 61844313 [email protected]

Rupesh Sankhe Power/Capital Goods +91‐22 61844315 [email protected]

Vinay Nair Oil & Gas +91‐22 61844319 [email protected]

INSTITUTIONAL SALES

Dinesh Bajaj Sales +91‐22 61844341 [email protected]

Dipesh Jain Sales +91‐22 61844342 [email protected]

R. Sriram Sales +91‐22 61844340 [email protected]

Shabbir Dahodwala Sales (USA) +1‐212‐2674334 [email protected]

Tejash Gandhi Sales +91‐22 61844345 [email protected]

INSTITUTIONAL SALES TRADING & DEALING

Bhavesh Gandhi Institutional Dealer +91‐22 61844368 /69 [email protected]

Prashant Oza Institutional Dealer +91‐22 61844370 /71 [email protected]

Parag Shah Sales Trader +91‐22 61844364 /65 [email protected]

Sriram Jagdish Sales Trader +91‐22 61844366 /67 [email protected]

Gurdarshan Singh Kharbanda Sales Trader +91‐22‐61844368 / 69 [email protected]

PRODUCTION

Asim Kumar Mohapatra Editor +91‐22 61844318 [email protected]

Vishal Randive Database Analyst +91‐22 61844321 [email protected]

Vijayalaxmi Moolya Production +91‐22 61844328 [email protected]

For further enquiries please contact:

[email protected]

Tel: +91‐22‐6184 4300

Disclosures Appendix

Analyst certification

The following analyst(s), who is (are) primarily responsible for this report, certify (ies) that the views expressed herein

accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their)

compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this

research report.

Disclaimer

The information and views presented in this report are prepared by Karvy Stock Broking Limited. The information

contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the

accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss

incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors.

Investors must make their own investment decisions based on their specific investment objectives and financial position and

using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this

report, investors may please note that neither Karvy nor Karvy Stock Broking nor any person connected with any associate

companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document.

The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above

mentioned companies from time to time. Every employee of Karvy and its associate companies are required to disclose their

individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and

investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this

recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to

place orders only through Karvy Stock Broking Ltd. This report is intended for a restricted audience and we are not

soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an

invitation to make an offer, to buy or sell any securities, or any options, futures nor other derivatives related to such

securities.

Karvy Stock Broking Limited Institutional Equities

Office No. 702, 7th Floor, Hallmark Business Plaza, Opp.‐Gurunanak Hospital, Mumbai 400 051

Regd Off : 46, Road No 4, Street No 1, Banjara Hills, Hyderabad – 500 034.

Karvy Stock Broking Research is also available on: Bloomberg ‐ KRVY <GO>, Thomson Publisher & Reuters.

Stock Ratings Absolute Returns Buy : > 15%Hold : 5‐15%Sell : < 5%

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