this story originally appeared in on oct 16 2012 mumbai shares of chennaibased kitchen appliances manufacturer ttk prestigebse 284 have fallen 15 since friday after disappointing quarterly results and ratings downgrades by foreign and domestic brokerages the stock which declined 10 on friday following ttk reporting a 10 fall in net profit in the quarter ended september extended its losses by 5 to rs 3146 apiece after foreign brokerage clsa downgraded the company to sell from a buy rating earlier ttk shares which spiked 50 in the calendar year through september traded at a valuation of 31 times fy13 estimated earnings making it expensive compared with peers such as bajaj electricals 156x and havells india 176x the rally was on the back of an increase in market share in pressure cookers and international collaborations however the stock fell subsequently on costly valuations and decrease in earnings the company posted an 11 yearonyear growth in revenues in the september quarter its lowest in four years while some decrease was due to a delayed festive season spending cuts by consumers and rising power tariffs further eroded earnings gross margins declined by 1 percentage point yoy in q2 but improved 70 basis points bps qoq as the june price hikes lent a hand and product mix was favourable rising costs caused operating profit margins to fall by 160bps and operating margins to retreat 180bps net profit declined 10 yoy and came in 27 below estimates while festive demand is now on track the high power tariffs will continue to impact consumer demand for induction cooktops and we see downside risks to management guidance of 25 growth for the year and cut estimates by 1115 said clsa in a report released on monday according to espirito santo which downgraded ttk to neutral from buy last thursday while sales of ttks products have been fairly resilient during the economic slowdown slowing gdp growth negative real wage inflation and lack of employment opportunities increase risks to consumption of discretionary items this risk the broking firm added has been exacerbated by persistent inflation and a slow monsoon however despite the negative outlook for the near term some of the brokerages remain optimistic of the companys long term prospects besides its flagship kitchenware business ttk prestige has also entered into a joint development agreement jda with salarpuria developers for the bangalore land parcel which has been freed up following the relocation of its manufacturing unit from bangalore to coimbatore in 2007 said ambit capital in a recent note this jda is intended to build a mixeduse development which will bring in recurring revenue stream through annual rentals on leased property and a onetime cash inflow from the sale of residential and commercial properties we value the expected cash flows from this real estate venture separately