TTK Prestige Ltd (NSE: TTKPRESTIG) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Yash Jain — Analyst
Saranyan R — Whole-Time Director and Chief Financial Officer
Venkatesh Vijayaraghavan — Managing Director and Chief Executive Officer
Analysts:
Sameer Gupta — Analyst
Priyank Chheda — Analyst
Aniruddha Joshi — Analyst
Resha Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to TTK Prestige Limited Q3 FY ’24-’25 Earnings Conference Call hosted by Ampit Capital. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Yash Jain from Ambit Capital. Thank you, and over to you, sir.
Yash Jain — Analyst
Thank you,. Hello, everyone. Welcome to TDKC 3Q FY ’25 earnings call. From the management side today, we have Mr, Venkatesh Vijay Ragwan, the Managing Director and CEO; Mr, Shankaran, Advisor to the Board; and Mr, who is the Whole-Time Director and CFO. Thank you, and over to you, sir, for your opening remarks.
Saranyan R — Whole-Time Director and Chief Financial Officer
Good evening. Welcome everyone for earnings call of TTK Prestige. This is Saranyan here. Before I hand over the proceedings to our Managing Director, Mr, Venkatesh, I just want to remind the participants of the Safe-Harbor class. The discussion today may contain certain statements which are futuristic in nature. Such statements represent the intentions of the management of efforts being put in by them to raise the certain goals. The success in releasing these goals depends on various factors, both internal and external. Therefore, the investors are requested to make their own independent judgments by considering all relevant factors before taking any investment decision.
Over to you.
Venkatesh Vijayaraghavan — Managing Director and Chief Executive Officer
Yeah. Hi, good afternoon, everybody. I think thank you for this call and for having attended this call. The quarter has been sort of a muted quarter for us. At a broad level, from an industry perspective, post a significant growth that the industry did see during the festive season, we’re seeing a little bit of a muted quarter.
The urban market seems to be sort of stable in the demand. While we do see that from a rural perspective, the demand is sort of a little subdued and there are specific channels in the rural markets which have got sort of not leveraged this year, leading to a little bit more slow-growth in the rural markets as well. Overall, we do see that the business is stable and a lot more robustness coming into the fold as we move forward.
Specific to the quarter, there has been a sort of a lull, as I mentioned, because of a post-season demand that has not been in-line with what we had sort of expected. But we do believe that as we move forward, the consumption should pick-up and that should be reasonably well-placed for us as we move forward.
From an overall perspective, we do see robust demand in the urban markets. The rural market challenge in terms of overall consumption as well as in terms of some of the channels continue to be a sort of a challenge. That would probably be a little bit of a long-term problem that we face and we do believe that it requires a little bit of structural correction as it moves forward.
With that, I would probably leave it to a couple of questions to be open. We are quite confident and we are quite happy about the way some of our internal matrices are working, including market-share gains that we’ve seen in our core categories, movement of some of our channel-based growth, we are seeing robust growth in e-commerce, large-format stores, also in terms of our own-retail stores as well.
So we do believe that as we move forward, as the demand picks up further, we should see considerable growth as we move, subject to, of course the structural challenge that we’ve had with the rural market. But we do believe that as we move forward in the next couple of quarters, this should be sort of helping us grow in a robust manner.
With that, I’ll probably open up the conversation to a couple of questions and take it forward from there.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles.
First question is from the line of Sameer Gupta from India. Please go-ahead.
Sameer Gupta
Hi, sir, good evening and thanks for taking my questions. Firstly, sir, you’ve called out the impact of the MFI channel INR32 crore in 3rd-quarter and INR93 in nine months. Now this is something that has impacted the previous quarters also. And overall growth for us has seen a deceleration used to — was running in low-single digit growth this quarter is a 3% decline. So MFI alone or rural alone doesn’t explain this moderation, right? So can you help us explain like are there any other factors because again, demand slowdown was something which was continuing, MFI channel weakness was continuing. So something on this, sir?
Venkatesh Vijayaraghavan
No. So like I said, I think this is — this is the specific to the quarter, it is because of a realignment in terms of the post-festive season demand. If you were to look at the full-year or if you were to look at YTD, we are reasonably placed in the non-MFI channels and we do see volume growth happening in those channels. Specific to Q3, the slow-growth has been essentially on account of the demand that’s happened post-season and that we believe is more a corruption that’s happening between Q2, 5G fulfillment and fulfillment. We do believe is…
Operator
Sir, your voice is breaking.
Venkatesh Vijayaraghavan
Can you hear me now?
Operator
Slightly better, sir.
Venkatesh Vijayaraghavan
Okay. So as I mentioned I think when you look at the slightly long…
Operator
Your voice is breaking again it started breaking. I’ll just reconnect you to the call just a moment. Ladies and gentlemen, please hold while we reconnect to the management. Thank you. Ladies and gentlemen, thank you for patiently holding we have the management line reconnected. Over to you, sir,
Venkatesh Vijayaraghavan
Yeah, like I was specifically answering the question, Q3, the MFI channel has been a continuing factor for the last 3/4. This quarter, compared to the previous quarter, we’ve seen a drop-in demand post the festive season and that is the reason why you would see the Q3 numbers muted as far as the overall is concerned. Underlying concern of the MFI channel has been there for the last 3/4.
Sameer Gupta
Got it, sir. So if like going from 1Q onwards of FY ’26, this will be in the base and our growth at least if it doesn’t come back, even then our growth should be what it is currently tracking with the non-MFI channel. Would that be a correct understanding?
Venkatesh Vijayaraghavan
Yeah, that’s a fair assumption.
Sameer Gupta
Yes. Got it. Sir, second question is on the gross margin. So you have mentioned marginal price increases due to commodity price inflation. And despite that, we have seen a 150 basis-point gross margin expansion this quarter. Last quarter was flattish. So again, just trying to understand the major driver here.
Venkatesh Vijayaraghavan
See the — so this is — this is on account of a delayed price impact that we do believe will start hitting the market as we move into the next quarter. Some of the price corrections taken by the industry by us over the last few months will sort of move-in depending on the inventory movement. The margin is a reflection of our subsequent cost management that we’ve been able to do both at a raw-material level as well as in terms of our overall costing. So therefore, you would look at better margins for quarter.
Sameer Gupta
Got it. So this thing is sustainable going-forward.
Venkatesh Vijayaraghavan
Yeah, this is sustainable going-forward. Having said that, I would like to bring to the notice that we do see pressures of swing in prices happening with aluminum prices. It is still there, the is still there. We’ve been able to manage it a little more better with the forward planning. But overall, there is a little bit of pressure on the raw-material pricing that continues to be existing.
Sameer Gupta
Do you anticipate more price hikes?
Venkatesh Vijayaraghavan
As we speak the price, no, a price hike is something that from a perspective, given that we’ve taken one brand last quarter, the impact we felt as we move forward, depending on requirement we’ll take that call as we move forward.
Sameer Gupta
Got it, sir. Last question if I may squeeze in. This INR13.5 crore other expenses towards consultancy. I think I recall this that this was for six months, so this is the last quarter of these expenses or do we expect it some of this to recur going-forward also?
Venkatesh Vijayaraghavan
Right now this is a one-time arrangement. We will come back if there is specific arrangements around that. This is pertaining to the six months window that you had mentioned.
Sameer Gupta
Got it. So we don’t expect anything for 4th-quarter onwards till now. I mean, things can change, but till now there is nothing. Got it, sir. I’ll come back-in the queue for any follow-ups. Thank you.
Operator
Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star N1. Next question is from the line of Priyank Chheda from Capital. Please go-ahead.
Priyank Chheda
Yeah, hi, sir. So in last quarter, we — or a few quarters ago, we had laid down clear priorities with respect to first penetration. So if you can highlight what has been the growth in the non-South market, that is one first priority.
Second, on new product developments, if you can further highlight what has been the growth contribution from MPD.
And third was digitization. So we are planning across various sales channels to be digitized. So where are we on these three priorities?
Venkatesh Vijayaraghavan
On the digitization front, we have moved very aggressively on the sales front, two fronts, one in terms of digitizing the complete finance-related transactions between our distributors and the primary company. Second is also in terms of enabling our sales force at the ground level to be able to service the orders as well. So I think we’ve very aggressively moved on that and that’s giving us benefits of complete visibility of the reach that we have today in the general trade channel and also in terms of being able to understand consumer trends as well. So I think digitization progress and happy with the progress being made and we do believe they will help us in terms of productivity as we move forward.
On the, we the new product we said price of…
Operator
Your voice is breaking. it is not coming clear, sir.
Venkatesh Vijayaraghavan
No, I think the line then some problems there with the line. Can you hear me? Hello.
Operator
Yeah, it is still breaking, sir.
Venkatesh Vijayaraghavan
You may have to connect the sir, then you can.
Operator
Sir, I’ll just correctly clear you clearly.
Venkatesh Vijayaraghavan
We are able to hear you clearly. No issues at all.
Operator
Okay. So you can go-ahead. I’ll just check the audio. You can go-ahead.
Venkatesh Vijayaraghavan
Yeah, yes. Sorry for the disturbance. So like we had mentioned in the previous query as well, I think our overall growth outside of the MFI channels are reasonably strong enough. And one of the reasons for that is the NPD launches that we’ve done. We’ve introduced around 53 SKUs during the quarter. We’ve also sort of reject our portfolio of products in Cookwear and in appliances. We have turned all the gaps that we had in Cookwear earlier.
So a combination of all of this is actually helping us grow faster overall in the general trade as well as in the e-commerce store, large-format stores channel. So I think that strategy in my mind is work-in progress, but it is executing very — it is getting executed very rapidly. We’ve been able to therefore expand the new product portfolio significantly as well.
As far as the non-South is concerned, while I don’t want to come back with specific numbers, I’m quite happy and we are confident that some of the — some of the initiatives that are being unleashed in the market are yielding initial results seems to be good. This is one initiative that probably will take some more time before we have to really come back with concrete numbers, but I do believe that some of the initiatives that we have launched, we are confident that we are able to get a impact strongly in these markets. At an overall level, we are also happy that some of our categories we’ve been able to substantly increase our market shares as well. So I think overall moving in the right direction is it would be the point-of-view that I would place it.
Priyank Chheda
So would you be able to call-out which categories where you have gained market-share in traditional channel?
Venkatesh Vijayaraghavan
Both where we are sort of gaining, while these numbers are not — these numbers are through syndicated research’s common. We do believe that we’ve sort of improved our market-share with cookers and.
Priyank Chheda
Got it. And this includes a sub-segment — question that I have, which is the judge brand. Clearly, the strategy that company is laying down is reflecting in double-digit growth even in Q3. So now the question is that is this a market compulsion or is this a strategic thought that TTK has thought to now play in this mass-market because it’s kind of — we are — we have a larger portfolio in the mass premium and now we are getting full — we’re putting down double energy into mass-market. So broadly, what would be the strategic thoughts in that? And is the market-share gains coming out because of this?
Venkatesh Vijayaraghavan
It is very clearly a structured call that we are taking to address some of these opportunities that we believe can be addressed through the mass brand without cannibalizing the mother brand. And that I think is a strategy that’s worked in multiple categories and we do believe we would be able to sort of execute it in this category as well. So-far, we’ve been able to see reasonable success. I think there’s a lot more that work needs to be done on that.
From a market-share perspective, this is a little too small in nature right now to impact the overall market-share, but it’s in the right direction. So the market-share gains are a combination of both Prestige as a brand as well as the sub-brand strategy that we have played around. The overall — the overall thrust on the sub — on the brand will continue to be there as we focus. We are working on sharpshooting some of the efforts in some geographies so that we are able to scale it up faster.
Priyank Chheda
And judge has now reads to what percentage of TTK distribution channel sir?
Venkatesh Vijayaraghavan
Now like I said it is, I would say it is still in very rudimentary stages. It has been in select geographies doing well. It has been on a pilot board in our view. I think it will take us a couple of quarters before we come back with specific numbers on that, but suffice to say that we’re quite happy with the progress and the response that we’ve seen.
Priyank Chheda
Perfect. And just last question from my side on the segment seems that even nine months the category growth itself is a problem or is it a problem of a certain new launches needs to be focused? What’s the core rectification that’s that are required in this category or in this segment for TTP or for industry would be helpful. Thank you.
Venkatesh Vijayaraghavan
So cookers category, our belief is that it runs on the twin engine of premiumization in the urban market and a little bit of a push that is required in the mass-market beyond the Tier-2, Tier-3 towns. So we do believe that the cooker category is under stress also for the fact that the category is well penetrated today. So I think the cooker category is something that we would — we would lead the industry and we do believe that there are opportunities both around the premiumization as well as in terms of some of the market-specific introductions that we need to do further down the strata in terms of Tier-2, Tier-3 towns as well. Compared to the other categories, cooker category, yes, definitely needs a little bit of a slightly different approach when compared to what is happening today.
Priyank Chheda
So there are very interesting innovations that are happening…
Operator
May we please request you to rejoin the queue for the following questions, sir. Thank you. Next question is from the line of Aniruddha Joshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. Thanks for the opportunity. Sir, just wanted to understand how does the MFI channel essentially work for us? Means for in a way, it’s a very small product, be it a cooker or a, etc. So how does the channel work? Whether the company sales in a way rural channels and then consumers use the MFI funding or in a way buying the product or I mean, how does the channel work? That is question number-one.
And then question number two, if you can give more color on the — in a way, the impact that we are seeing in a way east, West, north South, which segment is doing — which region is in a way performing a bit poorly or in a way in terms of metros and rural markets and then urban — sorry, and rural markets, which are the regions are again doing good and relatively poorly? Yeah, that’s my question.
Venkatesh Vijayaraghavan
By channels, whatever channel partnership where they reach the consumer, they loans to consumer and directly reach the consumers through the market channel. It’s a sort of a channel — it’s a distribution channel that we’ve used…
Aniruddha Joshi
Your voice is breaking. Sorry, sir.
Venkatesh Vijayaraghavan
Okay. Can you hear us again?
Aniruddha Joshi
Yeah better now.
Venkatesh Vijayaraghavan
No, okay. I think the channel is a distribution partnership that we had sort of looked at where they specifically address reaching the consumer challenge is reaching consumers what is addressed by the channel and then from there it gets distributed to the consumers. In a way it’s a B2B channel that us reach-out to the rural markets or the rural market. They facilitate the reach combined with the financial loans that they give…
Operator
Sorry, sir, sir, your voice is really breaking. I’ll just reconnect you again because ladies and gentlemen, please hold while we reconnect to the management, ladies and gentlemen, thank you for patiently holding. We have the line for the management reconnect. Over to you, sir.
Venkatesh Vijayaraghavan
Sorry, so really sorry for the disturbance. With regards to your question on the MFI channel, they act as a distribution channel for us, helping us reach to the rural consumers. I mean that’s the — that’s an arrangement that we have with them. It’s a pure distribution arrangement that we have with them. They facilitate our reach.
In terms of —
Aniruddha Joshi
I mean, in terms of we sell to these MFI agents and then they sell it to the consumers. If that is correct understanding?
Venkatesh Vijayaraghavan
Yes, yes. They definitely did distribution funding.
Aniruddha Joshi
Yes. Okay. So means if the MFI channel — the MFI funding route is in a way impacted right now. So that impact would be largely at the — at this agent level or in a way at the consumer level also.
Venkatesh Vijayaraghavan
So as far as we are concerned, we are not looking at it from consumer perspective. The MFA channels were working with us in a partnership due to reasons of their own internal constraints today, they are not working with us. So that is impacting us as a channel. So it is in no way a reflection of the rural market or anything. It is more to do with a choice that the channels have made not to work with us due to their internal constraints.
Aniruddha Joshi
Okay. So sir, is this a structural issue or do you see the agents again coming back-in, let’s say pre FY ’24.
Venkatesh Vijayaraghavan
We see this as a structural issue. It was an opportunity that sort of got utilized, but we do believe that this is a current scenario. This is a structural issue and may or may not be scalable as we move into it.
Aniruddha Joshi
Oh, okay. Sure, sir. Understood. Understood. Sorry, on the next question, we were speaking.
Venkatesh Vijayaraghavan
No, specific to regions, I think we’re uniformly seeing it across. We would probably call-out a little bit of East. East is a little bit lower on the growth rate when compared to the rest of the country.
Aniruddha Joshi
Okay., in terms of metros, R1 markets, rural markets, which regions are doing relatively better and relatively poor.
Venkatesh Vijayaraghavan
No, which is what I said. If I were to look at it from a region perspective, we are seeing quite a spread of growth across the markets in the Tier-1 and the metro towns. It is uniformly across South, West and north. East is one area that we can probably call-out from a geography perspective. Overall, from Tier-2, Tier-3 towns, we are seeing robust growth now happening, which is reflecting also with the sub-brand growth also facilitated by e-commerce. So we do see growth in the Tier-2, Tier-3 towns.
Aniruddha Joshi
Okay. Sure, sir. Understood. Lastly, what is the MFI contribution, let’s say, in FY ’24 and a judge revenue contribution in this quarter or nine months, if you can indicate percent of total sales? Yeah, that’s it from my side. Thank you.
Venkatesh Vijayaraghavan
Okay. We’ll probably come back on there as we finish the wrap-up the calls.
Aniruddha Joshi
Yeah. Okay, sure, sir. Sure. Thank you.
Operator
Thank you. And next question is from the line of Resha Mehta from Green Edge Wealth. Please go-ahead.
Resha Mehta
Yeah. Thank you. So just wanted to understand your non-traditional channels a little better. So if we look at the CSD channels, even that has had a structural issue since the last two-odd years. So in terms of revenues, if we were to look at it from a nine-month standpoint, are we back to the Nine-Month FY ’23 revenue numbers?
Venkatesh Vijayaraghavan
No.
Saranyan R
Not yet. We are closer to that.
Resha Mehta
Okay. So because in FY ’24, if I’m not wrong, the revenues from CSE channel had almost become half versus FY ’23. So in FY ’25, you’re saying that we would be closer to the FY ’23 revenues. Is that correct?
Saranyan R
Can you — your question is on specific channel or overall number?
Resha Mehta
PSD, CSD. Specifically, on CSD channels.
Saranyan R
We will not be there. We will not be there.
Resha Mehta
Sorry, I didn’t understand.
Venkatesh Vijayaraghavan
We haven’t — we have not seen demand pickup with specific reference to the CSD channel in this financial year.
Resha Mehta
Okay. So the CSG revenues for nine months of this financial year, would it be closer to the nine months of FY ’24 revenues or would it be closer to the nine months of FY ’23 revenues?
Venkatesh Vijayaraghavan
It will be closer, it will be — it will be sort of closer slightly lower to FY ’24.
Saranyan R
Yeah.
Resha Mehta
Okay. So it has declined further, right? And in terms of rural while, yes, a lot has been spoken about the MFI part of the rural channel. So just wanted to understand, so if, let’s say, we are doing around 4%, 5% revenues from the rural channels. How much of that comes via the MFI route and how much via the non-MFI route?
Venkatesh Vijayaraghavan
So we do not measure our rural outside of the MFA channels. We don’t have that at this point of time. Whatever we used to call as rural or whatever we are mentioning right now is entirely the MFI channel.
Resha Mehta
Okay. Okay. And the corporate sales channel, right, the institution sales channel. So here, typically the revenues that we would be seeing from this channel would be in the festive Q3 quarter. Is that understanding right?
Venkatesh Vijayaraghavan
Yeah, it is part of it. It varies on a yearly basis, but yes, the festive season plays a good role in terms of the institutional sales, yes.
Resha Mehta
And what would be the kind of decline that we would have seen in this channel or from a Nine-Month perspective?
Venkatesh Vijayaraghavan
There’s been — there has been a decline, not as sharp as in the other channels. There has been a decline in this channel as well.
Resha Mehta
So would that be a low-single digit, high-single-digit, double-digit, if you could just give some flavor there?
Venkatesh Vijayaraghavan
I think we’ll probably reach back to you on that specific question. But suffice to say directionally, the institutional channel is also under pressure for growth.
Resha Mehta
Got it. And exports, if I’m not wrong, after a long-time, we’ve mentioned that we’ve had robust orders. However, the delay in shipments is what caused the revenue decline. So if you can just talk about the export channel, are we seeing that picking-up or reviving or at least being at par with last year’s revenues or is there any reversal there?
Venkatesh Vijayaraghavan
So the first-half of the year, we did have supply chain-related problem and that has sort of led to delays in the orders, which is reflecting a bit in the Q3 numbers as well. But our belief and what we have seen is that we are definitely seeing a lot more inquiries coming in the second-half of the year. And we do believe that we will be able to pick steam as we move forward couple of quarters, we will look at significant steam getting picked-up in the exports journey as well. The first year, we had supply constraints exactly.
Resha Mehta
And these exports are largely to which countries?
Venkatesh Vijayaraghavan
The exports would be to large part of the exports from our perspectives to Europe.
Resha Mehta
Okay. Okay. And would it be possible to just give some qualitative, you know, a sense on the initiatives that we would have taken or post hiring the consultant?
Venkatesh Vijayaraghavan
It’s too early for us to come back on this. We definitely would brief you as we move forward. I think right now what we have done is to do a very deep, deep-dive in terms of the opportunities and in terms of the future strategies that we need to look at. Some of them getting rolled-out, some of them will get rolled-out. But I would request that probably a couple of quarters down the line is when we’ve been in a position to specifically answer that question.
Resha Mehta
All right. Thank you so much and all the best.
Venkatesh Vijayaraghavan
Thank you.
Operator
Thank you. All participants to ask a question, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press R and one on the touchstone telephone thank you if you wish to ask a question, you may press R&1. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for the closing comments.
Venkatesh Vijayaraghavan
So thank you. Thank you for the — for asking us the right set of questions and I think we are quite energized in terms of as we move forward. There are challenges around demand and challenges around specific issues that needs to be sorted-out, but we do believe that as we move forward, we are better poised and the industry in general would move-in the right direction and looking-forward to good quarters as we move forward. Thank you.
Operator
Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.