TTK Prestige Ltd., India’s largest kitchen appliances maker, dropped for a third day, heading for the steepest decline in more than two months, as some investors judged the stock’s surge this year excessive.
The shares slid 5.8 percent to 2,499 rupees, the worst performer on the BSE Mid-Cap Index today, set for the biggest fall since April 8.
“Investors may be booking profits as valuations of the company are very high compared with other companies in the consumer durables businesses,” Shivani Mehra, an analyst at Mumbai-based Techno Shares & Stocks Ltd., said by phone.
TTK Prestige has jumped 53 percent this year, the third-best performer on the BSE Mid-Cap Index, and trades at 58.2 times estimated earnings, according to data compiled by Bloomberg. Whirlpool of India Ltd., the local unit of the world’s largest appliance maker, trades at 12.5 times earnings and the BSE Consumer Durables Index, a gauge of eight companies, trades at 27.5 times.
The company may face rising competition and a drop in market share as “big players such as Philips and Whirlpool are getting into the business of kitchen appliances, making the segment overcrowded,” Mehra said.
HDFC Asset Management Co. and DSP Blackrock Investment Manager were the two biggest asset-manager shareholders in the company, according to Bloomberg data. HDFC AMC held 3.3 percent at May 31 and DSP Blackrock owned 1.6 percent.
“Some fund houses entered the stock” at around 900 rupees a share, Mehra said, declining to name them. “They will get almost thrice the returns if they exit now.”
K. Sankaran, corporate affairs director at Bangalore-based TTK Prestige, declined to comment on the share-price movement.
The company plans to spend 2 billion rupees ($45 million) this year to double its pressure-cooker capacity to more than 8 million units a year and quadruple its cookware capacity to more than 1 million units, according to a presentation to investors on May 27.