| TTK Prestige Limited | ||||||
| Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL AA/Stable/CRISIL A1+' ratings on the bank facilities of TTK Prestige Ltd (TTK).
The company reported a 3% y-o-y growth in operating income in fiscal 2023 at ~Rs. 2777 crores, driven primarily by domestic sales which experienced a growth of 5%, as exports remained impacted owing to macro-economic headwinds in global markets. The profitability for the year was impacted with company reporting operating margin at ~13% (~15% in fiscal 2022) due to high value of carryover inventory till 9MFY23 and inventory write off in Q4FY23. This, coupled with higher operating expenses amidst inflationary environment impacted margins for fiscal 2023.
Wide presence of TTK in the online and offline channels, sustained demand for branded cookware and appliances, strong brand equity and addition of new products should support revenue growth of 8-10% over the medium term. Operating margin should improve and remain stable at 14-15% as raw material prices stabilize and will benefit from better economies of scale with higher sales.
Financial risk profile of TTK remains robust with healthy net worth and comfortable debt protection metrics. Liquidity is supported by estimated cash balance of more than Rs 800 crores as on March 31, 2023, and unutilized bank lines of Rs 76 crores. Over the medium-term, financial risk profile is estimated to remain strong.
The ratings continue to reflect the strong financial risk profile, marked by heathy networth and negligible debt, and sufficient liquidity. The ratings also factor in the strong market position of TTK in the cookware and kitchen equipment space. These strengths are partially offset by exposure to intense competition from both organized and unorganized players, and susceptibility to volatility in raw material prices and foreign currency rates. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of TTK, TTK British Holdings Ltd, Horwood Homewares Ltd (Horwood) and Ultrafresh Modular Solutions Limited (Ultrafresh) collectively referred to herein as TTK. Horwood and Ultrafresh are subsidiaries of TTK, operating in the same business, with business and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:Robust market position in the kitchen equipment space, with sound operating capabilities: The company should be able to maintain its strong market position, driven by a wide distribution network and healthy opportunities in the global market. Prestige is one of the strongest kitchen equipment brands, with a leading market share in the domestic pressure cooker segment. The company is present across the entire range, which includes cookware, appliances, gas stoves, mixer-grinders, cleaning solutions, etc. Competing with global brands, it has also ventured into the luxury segment in categories such as built-in ovens and island chimneys through Prestige Lifestyle stores. The in-house research and product development team helps expand the product base with innovation and improve overall efficiency.
Healthy financial risk profile: The financial risk profile should remain stable over the medium term, backed by healthy cash accrual, a comfortable capital structure, nominal outstanding debt (on a standalone basis), and robust debt protection metrics. The networth is sizeable at over Rs 1,700 crore as on March 31, 2023, up from Rs 1,593 crore as on March 31, 2022. Debt protection metrics remains comfortable with gearing estimated to be around 0.02 times and NCATD of 6.37 times as on March 31, 2023.
Weaknesses:Exposure to intense competition: TTK has a healthy market share in the domestic pressure cooker segment. In the inner-lid category, the company competes with established players such as Hawkins Cookers Ltd, which also holds a significant share of the pie. The multi-chain, large-format stores have further launched their own brands, to target customers looking for all products under one roof. Though the company is gradually increasing its market presence in the electric appliances segment by introducing new designs and products every year, but it continues to face competition from various regional and national players.
Susceptibility to volatility in raw material prices: Operating margin remains susceptible to volatility in prices of key raw materials (steel and aluminum) and adverse movements in forex rates. The company has been successful in transferring cost hikes to end-customers in the past but may still be partly vulnerable to any adverse movement in input cost. |
Liquidity: Strong Cash and cash equivalents estimated to be more than Rs 800 crore as on March 31, 2023. Furthermore, the fund-based limit of Rs 76 crore remained unutilized in the 12 months through March 2022. Expected cash accrual of around Rs 250-300 crores per fiscal should comfortably cover the annual capital expenditure of Rs 100-120 crores, and debt repayment in fiscal 2025. With the gearing estimated at 0.02 time as on March 31, 2023, there is sufficient headroom to raise additional debt. The minimal working capital expense is likely to be met via available cushion in the bank limit.
While the company is actively looking for an acquisition, there are no deals in the pipeline presently. In case of any deal materializing, the company will fund the same through its surplus fund and will still be able to maintain liquid surplus of around Rs 250 crores on a steady state basis. |
Outlook: Stable CRISIL Ratings believes the business risk profile of TTK will continue to be supported by a healthy market position in the kitchen equipment segment. Furthermore, the strong balance sheet and adequate liquidity should help offset any impact of stressed business conditions. |
Rating Sensitivity Factors Upward Factors:
Downward Factors:
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About the Company Set up as a private limited company in 1955, TTK went public in 1994. It is among the leading brands in the kitchen equipment space, especially in the pressure cooker segment. The product profile is diversified, with 31% of revenue coming from pressure cookers, 16% from cookware, 49% from appliances. TTK is the flagship company of the TT Krishnamachari group of companies, which has interests in healthcare and consumer products and services. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Consisting of Standby Documentary Credit (SBDC) Facility / Overdraft of Rs 0.25 Crores |
Annexure - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 19.5 | Canara Bank | CRISIL AA/Stable |
| Cash Credit | 18 | Bank of Baroda | CRISIL AA/Stable |
| Cash Credit | 38.5 | HDFC Bank Limited | CRISIL AA/Stable |
| Letter of credit & Bank Guarantee | 18 | Bank of Baroda | CRISIL A1+ |
| Letter of credit & Bank Guarantee | 21 | HDFC Bank Limited | CRISIL A1+ |
| Letter of credit & Bank Guarantee | 21 | Canara Bank | CRISIL A1+ |
| Standby Letter of Credit* | 41.5 | The Hongkong and Shanghai Banking Corporation Limited | CRISIL AA/Stable |
Criteria Details
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