Poor consumer demand proves a dampener for TTK Prestige, reports 27% decline in Q2 profit

Kitchen and home appliance maker TTK Prestige reported more than 27 and 15 per cent decline in its profit and revenue, respectively, for the July-September 2023 period on account of subdued demand for consumer durables, despite softening inflation.

The Bengaluru-headquartered firm’s standalone quarterly PAT plunged almost a third Y-O-Y to Rs 62.17 crore. Its standalone revenue from operations declined by more than 15 per cent to Rs 683.67 crore from Rs 807.86 crore in the year-ago quarter – the sharpest YOY decline in quarterly growth the firm has seen in several years now.

“The Indian economy continued to do better than many other developed counties. While there was some softening of inflation the same was not reflected in the customer sentiment as evident from the continued pressures on consumer durables including kitchen and home appliances during this quarter. The growth in GDP was a result of robust service sector balancing the tepid performance of consumer durable sectors,” noted the investor presentation.

It further said automobile, travel, hospitality, and entertainment continued to get higher share of the wallet during this quarter, affecting the demand for consumer durables.

Besides, raw material prices remained stable during this quarter as well. “Overall, due to slack in growth, there has been pressure to pass on savings to the market by competition,” it noted. The company also said that demand was tepid across channels, but competitive intensity has been high during the quarter with increased discounting by most brands and online channels.

On a consolidated basis, its quarterly revenue declined to Rs 729.47 crore compared to Rs 842.35 crore in the year-ago quarter. Its PAT fell to Rs 59.04 crore compared to Rs 84.49 crore a quarter ago. TTK Prestige accounts for the lion’s share of the consolidated business, which also includes subsidiaries TTK British Holdings, Horwood Homewares and Ultrafresh Modular Solutions.

The firm posted domestic sales at Rs 665.4 crore as against Rs 790.6 crore during the previous year period since the festive season was delayed as compared to the previous year. Meanwhile, export sales for the quarter was at Rs 18.3 crore registering a growth of 6 per cent on-year. Total sales was at Rs 683.7 crore as against Rs 807.9 crore of last year.

Its gross margin was lower than the immediate last quarter due to unfavourable product mix, higher sales promotions, and liquidation of high-cost inventory.

TTK Prestige said that with the global economy which was already affected by Ukraine-Russia geopolitical issues, is further affected now with the geo-political conflicts in West Asia which is likely to impact the crude prices contributing to inflationary trends. Further, the Indian economy is projected to grow by 6.0 and 6.6 per cent in FY24 subject to headwinds that may arise on account of global factors as well as deficient rains witnessed in many geographies.