TTK Prestige Ltd., India’s largest kitchen appliances maker, expects net income to rise 40 percent this fiscal year on demand for pressure cookers, funding an expansion plan, Chairman T.T. Jagannathan said in an interview.
Higher profit will fund a 1 billion rupee ($24 million) investment to double the manufacturing capacity of its plant in Tamil Nadu, he said. The Bangalore-based company plans to set up a plant in western India to make cookware, Jagannathan said. TTK reported net income of 524 million rupees last fiscal year.
TTK has surged five-fold in Mumbai trading in the past year as rising salaries and an accelerating economy spur residents of the world’s second-most populated nation to spend more on consumer products. The domestic market for pressure cookers is growing by an average 10 percent every year and for appliances by 15 percent, Jagannathan said.
“We expect the company to maintain 25 percent revenue growth due to the expansion plans,” said Shivani Mehra, an analyst at Techno Shares & Stocks Ltd. in Mumbai, who has a “hold” rating on the stock. “There is considerable demand and with the new capacity the company will be able to penetrate higher segments.”
The company forecasts revenue of about 7 billion rupees this year, an increase of 35 percent, Jagannathan said. Revenue rose by 24 percent to 5.1 billion rupees in the year ended March 2010, while net income more than doubled.
India’s economy has grown an average 8.5 percent every year during the past five years, doubling per-capita incomes in the period. There are 274 million people classified as so-called middle class, with the ability to spend between $2 and $20 a day, according to the Asian Development Bank.
“This is driven by India’s economic growth, which is increasing the number of people belonging to the middle class,” Jagannathan said.
TTK Prestige rose 0.8 percent to 927 rupees at 10:22 a.m. local time in Mumbai trading after gaining as much as 1 percent. The stock has more than doubled this year compared with a 4.2 advance by the benchmark Sensitive Index.
The company, which exports pressure cookers to the U.S., U.K., Australia, Japan, South America and the Middle East, earned 5 percent of its revenue from overseas last year, Jagannathan said.