TT Jagannathan, chairman of TTK Prestige expects to see double-digit revenue growth in the fourth quarter of FY15. He says there has been an improvement in the December quarter.
However, he adds FY15 margins will be under pressure as topline has been sluggish, but it will reverse in FY16.
He is also targeting export growth of 25 percent in FY16.
Below is the verbatim transcript of TT Jagannathan's interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.
Reema: How is Q4 shaping up? Two months are already done in to this Jan to March quarter. Is it a significant improvement compared to what we saw in the December quarter?
A: I won't say significant, there is an improvement of course but I certainly won't say it is significant.
Reema: So, can growth in Q4 be in double digits?
A: Yes, I believe that.
Sumaira: The month of January for you has been reasonably robust, would you say that on the ground things are now beginning to improve; are sales improving?
A: I would say they are repeating January, February and March.
Reema: In the previous quarter there was some pick up in the export market. What is the growth that we can expect in exports in FY16 and how much do you think exports will start contributing into your revenues?
A: We are looking at about 25 percent growth in export in FY16 but it will still contribute only about 5-6 percent of our total revenue.
Sumaira: The last time we had spoken to you, you had said that margin growth is very sensitive to your top line. Where do you see margins stabilising? Last time around they were below that 12 percent mark, where do you think the full FY15 as well as FY16 margins could trend?
A: FY15 margins will be under pressure because topline growth has been very sluggish but we believe in FY16 we will reverse everything and margins will go up well above the 12 percent mark.
Reema: You indicated that perhaps your revenue growth will be closer to about 10 percent for this fiscal year, that is FY15. Are you on track to meet that revenue estimate?
A: Maybe slightly under that but it will be around that.
Reema: So, slightly under that. And can you also tell us on the Gujarat facility, what would be the expected utilisation in FY16 and this improvement in margins that you expect in FY16, what would it be predicated on?
A: Largely two things 1) Growth in topline but more than growth in topline the control of costs because we will be utilising more capacity and hence the cost per unit will come down and we believe that we will build in efficiencies in FY 16 to bring the cost down.
Reema: What would growth in FY16 look like; will it be better than the near ten percent growth that we can see in FY15?
A: Yes it will be better but that is all I can say.
TTK Prestige stock price
On March 05, 2015, at 14:06 hrs TTK Prestige was quoting at Rs 3535.00, up Rs 120.45, or 3.53 percent. The 52-week high of the share was Rs 4830.00 and the 52-week low was Rs 2700.00.
The company's trailing 12-month (TTM) EPS was at Rs 92.83 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 38.08. The latest book value of the company is Rs 502.78 per share. At current value, the price-to-book value of the company is 7.03.
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