Speaking to CNBC-TV18 after the company’s March quarter earnings, Venkatesh Vijayaraghavan, CEO and Managing Director of TTK Prestige, said the kitchen appliances maker has proactively expanded production capacity to meet rising demand for induction cooktops, which have seen stronger consumer adoption in recent quarters.
“We proactively expanded our production capacities. We are now running at almost 2x of what we were in the pre-West Asia war period,” Vijayaraghavan said. “We’ve taken a little bit of a leap of faith in believing this will continue.”
The company had initially expected the surge in demand for induction cooktops to be temporary, but consumer behaviour appears to be changing more permanently, he said.
“Today, with these changes and the possible impacts that can be envisaged, people have started buying them more proactively. So, the category is here to stay,” Vijayaraghavan told CNBC-TV18.
He added that induction cooktops, which currently contribute around 12–13% of TTK Prestige’s sales, are likely to become a larger part of the company’s business as adoption continues to rise.
The company said the momentum seen in the March quarter has continued into the current quarter as well, aided in part by uncertainty in the global economy.
TTK Prestige’s March quarter performance was driven partly by the induction cooktop category, although Vijayaraghavan said the growth was not entirely dependent on it. According to him, induction cooktops contributed around 30–40% of the upside during the quarter, while the remainder came from transformation initiatives undertaken by the company over the past two years.
“In addition to induction cooktops, we’ve also seen reasonably good growth in the other categories,” he said.
TTK Prestige also flagged pressure on margins due to rising commodity prices, particularly aluminium and stainless steel, which are key raw materials for the company.
“There’s been a substantial impact on input prices, particularly aluminium,” Vijayaraghavan said, adding that aluminium prices could rise by nearly 10% in the first quarter.
The company expects to pass on a large part of the increase to consumers, while also relying on internal cost-saving initiatives to protect margins.
TTK Prestige Ltd. reported its March quarter results on 22 May. The company posted a net profit of ₹37 crore, compared with a net loss of ₹40.7 crore in the same quarter last year.
The year-ago quarter included a one-off impairment charge of ₹71.4 crore related to goodwill impairment at its UK subsidiary, along with higher expenses.
Revenue for the March quarter rose 12% year-on-year to ₹729 crore, while EBITDA increased 31% to ₹67 crore from ₹51 crore a year earlier. EBITDA margin expanded by 140 basis points to 9.2%, from 7.8% in the corresponding period last year.
Also Read | TTK Prestige Q4 Results: Margins expand as profitability returns; Stock risesThis is an edited transcript of the interview.Q: It was a good performance. We did see decent revenue growth. EBITDA grew by over 30%, and we saw some growth in your profitability as well. A large part was undoubtedly appliance-led. Could you give us a sense of what proportion of your sales in the fourth quarter was contributed by induction cooktops, and how much of that is playing out in the first quarter as well, in light of the uncertainty that still continues? What’s this likely to settle at going forward on an annual run rate, according to you?
Venkatesh Vijayaraghavan: The last quarter has been a good mixed bag for us, driven by induction cooktops, of course. However, I would like to qualify that. In addition to induction cooktops, I think we’ve also seen reasonably good growth in the other categories, driven by some of the transformation work that the organisation has been undergoing over the last two years.
Induction cooktops, no doubt, have had an impact, but that would probably be limited to 30-40% of the upside. I think a large part of our growth is also being underlined by some of the initiatives that have been bearing fruit for us over the last two years, and I’m quite sure that will continue to be the story as we move forward.
In terms of the appliance side, and in terms of the induction cooktop trend, we do see that even in quarter one, we are seeing offtake driven by a little bit of uncertainty around the global economy and the issues surrounding it. That uptake seems to be continuing in the first quarter as well.
Q: All right, just another follow-up on raw materials, because a large part of your raw material is obviously aluminium, and we’ve heard from the management of Hindalco just moments ago that aluminium prices are likely to rise globally as well. This geopolitical issue, along with the depreciating rupee and higher input costs for a lot of these players, is increasing many of your input commodity costs as well. So, to that extent, what kind of margin pressure do you foresee? In the fourth quarter, obviously, you had the benefit of lower-priced inventory. As that gets eroded, how much of a price hike do you expect, and how much of a hit on margins do you expect?
Venkatesh Vijayaraghavan: Yeah, there’s been a substantial impact on input prices, particularly in aluminium, and we’ve also seen stainless steel go up. These are two important commodity materials for us. Aluminium has seen a very steep increase in the first quarter. The price increase started happening towards the end of the last quarter, and it’s continuing into the first quarter as well. I do believe that could be to the tune of around 10%.
A large part of it, we believe, would be passed on by the industry to consumers, so we would look at holding on to margins with some amount of internal cost initiatives that we have undertaken. However, there is pressure on margins and, like you asked, the extent of the cost increase has been around 10%.
Q: Venkatesh, just a clarification on that. Since in the fourth quarter your revenue growth was pretty strong and we still saw margin compression, are there any near-term targets you could give us or any levers to improve this further? Also, on your induction cooktops, which are 12-13% of your sales and are a high-margin product, going ahead what sort of contribution do you expect overall? Are consumers increasingly shifting towards this, or do you think this is just a few-quarters phenomenon?
Venkatesh Vijayaraghavan: No, I think while we initially did believe that this could be a short blip, right now, going by consumer feedback, a lot of consumers have started to look at induction cooktops seriously. The category was always a supplement to gas cooktops and was always on the back burner. But today, with the changes and the possible impacts that could be visualised, people have started to buy them more proactively. So, the category is here to stay.
In my view, this is one of the shots that the category has got for growth, and I do believe that the growth will sustain. It may not be to the extent of what we saw in quarter four or are seeing in quarter one of this year, but it is sustained growth vis-à-vis what existed earlier. To that extent, I think margins from this category have been healthy and should help us as we move forward. It should help the industry as well.
Q: Now, Venkatesh, in light of that, is it fair to assume that induction cooktops will become a far bigger part of your business compared to what they currently are? From around 12-13%, does that go up to, say, 15-16% conservatively if this trend continues? And if the trend in buying is so strong, are you looking at expanding capacity and so on to cater to this demand?
Venkatesh Vijayaraghavan: Yes, with the increased adoption of this category happening, we do believe that it would be accretive to the organisation. We are market leaders in this category. In fact, we were the pioneers who innovated in this category, and we continue to be market leaders as well. So, we do believe that as this category starts to see stronger adoption triggers going forward, the growth would be accretive.
And yes, we proactively expanded our production capacities. We are now running at almost 2x of what we were in the pre-scenario period. Today, our capacities have been expanded to 2x, and we’ve taken a little bit of a leap of faith to say this would continue. Therefore, we’ve expanded our capacities 2x.
Q: Just on the core business then, let’s talk about cookers and cooktops, along with the Judge brand. On the cooker side, it’s a barbell strategy, right? Premium products selling at the cookers end, with newer materials selling as well. So, could you give us a sense of the growth breakdown at your premium end via price as well as how much of that is volume offtake? And Judge, which did about 50-60% sales growth, the mass play—how is that likely to grow in FY27? So, both on the upper end—volume and price growth—and the lower end—volume and price growth.
Venkatesh Vijayaraghavan: So, we follow our twin strategy through both Judge and Prestige. However, Judge, at this point in time, is a very small part of our portfolio. It’s an exercise that we believe can support future readiness, and therefore we’ve been investing in that brand.
Judge, as a part of the total portfolio, is very small. It’s not more than 2-3%. To that extent, I think the growth is being led by Prestige and driven by the premiumisation and innovation quotient of the Prestige brand. So, the Prestige brand continues to be the significant turnaround story that we are now demonstrating, complemented by a new market opportunity that Judge is helping us address. So, that’s the way I would place it at this point in time.
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