Equity Research INDIA

December 1, 2021
BSE Sensex: 57065
White goods & durables
ICICI Securities Limited
is the author and
distributor of this report
Analysis of Indian cookware market: Strong volume
growth likely to continue
Sector update India non-stick cookware market, Rs9.6bn in size, is a high-growth category
largely dominated by the unorganised sector (60% market share as of FY21). We
White Goods & believe organised players such as TTK Prestige will likely be net beneficiaries of
share shift from unorganised segment, caused by high inflation in commodity
Durables costs, improved product offerings and expanded distribution in rural areas. Tawa,
frying pan and kadhai are the deepest penetrated categories with presence in
most Indian kitchens. We also believe as most MNCs are not present in cookware
segment, Indian companies will benefit the most. TTK Prestige dominates the
organised market with a pie close to 58% in 2020. Nirlep (Bajaj Electricals) has
only 0.5% market share (Source: Euromonitor and Frost and Sullivan). Our top
picks: Havells India (BUY) and Crompton Greaves (ADD).
Reports in this series – Pressure cooker, Fans, Air coolers and Mixer grinders
 Market segments: Non-stick cookware (also known as Teflon cookware) can be
sub-segmented into different types: non-stick frying pan, tawa, kadhai, ceramic non-
stick cookware, etc. Frying pan, tawa and kadhai are deepest penetrated categories
with presence in >50% Indian kitchens. Cookware is also available in different metals
such as stainless steel, copper, aluminum, carbon steel, clay and stoneware, and
non-stick surfaces.
 High-growth market: The India cookware market size is ~Rs25bn. In this high-growth
segment, Teflon coated cookware, a.k.a. non-stick cookware, is expected to reach
Rs21bn by 2026 from Rs9.6bn in 2020 (Source: Euromonitor and Frost and Sullivan).
The organised industry is expected to register mid-teen CAGR till 2025, on account of
strong volume growth, high single-digit price hikes and steady gains from the
unorganised sector.
 Competitive landscape: While the primary source of competition in the non-stick
cookware market arises from unorganised players, TTK Prestige commands 58.2% of
the organised market. This is followed by Wonderchef and Stovekraft’s Pigeon, which
hold 22.3% and 18.9%, respectively (Source: Euromonitor and Frost and Sullivan).
 South India contributes 35% of total sales: Strong presence of key players in
southern India and the industry’s efforts to offer regional cuisine-making cookware
led to the region contributing 35% of total sales. Cookware has a short replacement
cycle of two years.
 Sector view & top picks: Considering the strong return ratios, healthy growth
potential and low penetration levels, we remain structurally positive on the white
goods and durables sector. We also expect the migration from unorganised to
organised sector to steadily generate value. Havells India and Crompton Greaves
Research Analysts: are our top picks.
Aniruddha Joshi Valuation summary
aniruddha.joshi@icicisecurities.com Price MCap Target RoE RoCE EPS CAGR P/E (x)
+91 22 6807 7249 Company (Rs) (Rs bn) Price (Rs) Rating (FY23E) (FY23E) FY21-24E FY24E
Manoj Menon Bajaj Electricals 1,074 123.2 1,165 ADD 17.4 20.0 34.2 27.9
manoj.menon@icicisecurities.com Crompton 453 284.4 504 ADD 28.2 36.6 8.6 36.0
+91 22 6807 7209 Dixon 5,097 302.3 5,200 HOLD 34.5 37.9 55.9 49.3
Karan Bhuwania Havells 1,363 853.9 1,650 BUY 21.9 24.4 22.5 44.4
karan.bhuwania@icicisecurities.com
TTK Prestige 9,962 138.1 12,580 ADD 17.2 20.3 16.8 37.5
+91 22 6807 7351
V-Guard 242 104.3 282 ADD 18.9 22.3 20.1 29.9
Pranjal Garg
pranjal.garg@icicisecurities.com Whirlpool 2,010 254.9 2,500 ADD 16.4 17.5 28.0 34.6
+91 22 6807 7650 Source: Company data, I-Sec research
Please refer to important disclosures at the end of this report
 White Goods & Durables, December 1, 2021 ICICI Securities

Analysis of cookware industry

We analyse the India cookware market with primary focus on the non-stick (Teflon-
coated) cookware segment, its growth rates, household penetration and market
shares of organised players. We note the non-stick cookware market is growing at
steady mid-teen growth rates.
Major segments of cookware market
Cookware is available in variety of metals such as stainless steel, copper, aluminum,
carbon steel, clay and stoneware, and non-stick surfaces. Non-stick cookware (also
known as Teflon cookware) can be sub-segmented into different types: non-stick
frying pan, tawa, kadhai, small pots, etc.

Chart 1: Major sub-segments of the non-stick cookware market

Source: Company data, I-Sec research

Huge market opportunity with steady growth rates

Cookware is a Rs25bn market in India. Of this, the high-growth segment – non-stick
cookware – was Rs9.6bn in 2020 and is expected to grow at 16.8% CAGR over CY20-
CY25 to reach Rs21bn in CY25. The volume CAGR in the same period is estimated to
be 9.9%.

Chart 2: High single-digit volume growth Chart 3: Mid-teens value growth

12.0 25.0

11.4
10.0
10.4 20.0 21.0
9.4
8.0 8.6 18.0
7.8 15.0
15.4
(Rs bn)
(mn)

7.1
6.0
13.2
10.0 11.3
4.0 9.6

5.0
2.0

- -
2020 2021F 2022F 2023F 2024F 2025F 2020 2021F 2022F 2023F 2024F 2025F
Source: Stovekraft RHP, Company data, I-Sec research Source: Stovekraft RHP, Company data, I-Sec research

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White Goods & Durables, December 1, 2021 ICICI Securities
A large opportunity for organised players
Unorganised sector dominates a sizeable 60% of the cookware market. However, we
believe the branded cookware players are well positioned to gain share due to: (1)
new innovative products with better features, safety and designs; (2) large players
have greater potential to operate in an environment of commodity cost inflation; (3)
improved product portfolios; and (4) distribution expansion by organised players and
rising share of modern retail and e-commerce.
Chart 4: Organised and unorganised sector breakup for non-stick cookware
market

Organised
40%

Unorganised
60%

Source: Industry data, I-Sec research

Difference in pricing of organised vs unorganised products

Non-stick cookware products such as Tawa, Kadhai and Frying pan are at premium of
15-25% to the regular products. However, we believe reduction in the pricing gap and
steady increase in income levels will result in most consumers shifting towards non-
stick cookware products.
Chart 5: Non-stick cookware products are at 15-25% premium to base products
25

22.9
20 21.8

18.8
15
(%)

10

0
Kadhai Fry pan Tawa
Source: Industry data, I-Sec research

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White Goods & Durables, December 1, 2021 ICICI Securities
Penetration of different non-stick cookware used in Indian kitchens
Non-stick frying pan is the highest penetrated category with presence in 71.4% of
Indian kitchens, which is followed by non-stick tawa in 67% of Indian kitchens. We
believe penetration will increase on the back of: (1) distribution expansion in rural
areas, (2) rising income levels of the Indian populace, (3) consumer demand for safe
for use products, and (4) rising number of nuclear families.
Chart 6: Cookware penetration

Hard-anodized non stick cookware 0.6%

Paniyarakkal
Paniyarakkal 1.3%

Appachetty
Appachetty 1.9%

Ceramic non stick cookware 6.4%

Other (small pots, pans etc.) 35.1%

Non-stick
Non stick kadhai
kadhai 56.2%

Non-sticktawa
Non-stick tawa 67.0%

Non stick frying pan 71.4%

0% 20% 40% 60% 80%

Source: Industry data, I-Sec research

Negligible MNC competition

Cookware is largely an Indian concept with almost no presence of any MNC player.
Most products such as Kadhai, Tawa, frying pan are sold by only Indian players. We
note there will be negligible competitive pressure for Indian players in Cookware.

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White Goods & Durables, December 1, 2021 ICICI Securities
Competitive landscape and market shares
While the primary source of competition in cookware arises from unorganised players,
which control majority of the market share, organised players continue to gain share.
TTK Prestige is the undisputed leader with at least 58% of the organised sector
market pie. Wonder Chef and Pigeon commands another 22.3% and 18.9% market
share, respectively. Nirlep (from Bajaj Electricals) has <1% pie of the market.
Chart 7: Market shares in non-stick cookware

Nirlep Others
0.5% 0.1%
Pigeon
18.9%

TTK Prestige
58.2%

Wonder chef
22.3%

Source: Industry data, I-Sec research

South India controls 35% of the total non-stick cookware market

Industry’s two major players – TTK Prestige and Stovekraft – enjoy strong brand
equity in South India. Further, industry’s efforts to offer special cookware (e.g.
Appachetty and Paniyarakkal) in South India have led to the region contributing 35%
of sales.
Chart 8: Region-wise break up of cookware market

North
23%
West
30%

East South
12% 35%

Source: Industry data, I-Sec research

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White Goods & Durables, December 1, 2021 ICICI Securities
Rural and urban breakup
The rural-urban break-up trend in non-stick cookware segment is similar to the
majority of the products in India, with urban areas dominating 65% of the total sales.
Increasing distribution in rural areas and launch of new products at attractive price
points will likely lead to growth of cookware in the rural market.
Chart 9: Rural-urban breakup

Rural
35%

Urban
65%

Source: Industry data, I-Sec research

Replacement cycle
While cookers need to be replaced every 4-5 years, Teflon-coated cookware comes
with shorter replacement cycle of just two years. Short replacement cycle results in
higher sales turnover.
Chart 10: Cookware has shortest replacement cycle
6

5
5
4
4
(Years)

2
2
1

0
Cooker Electric and other cookers Teflon coated cookware
Source: Industry data, I-Sec research

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White Goods & Durables, December 1, 2021 ICICI Securities
Key details about cookware market
The trade margins in cookware are generally 15-20% and the GST rate is 12%. Most
cookware companies spend ~2% of net sales in branding. Another important promise
to the consumers is 5-year warranty.

Table 1: Trade margins, promotions and market-creation opportunities

Consumer promotion spends Particulars
Trade margins 15-20%
Ad-spend ~2% of net sales
Promise to consumers 5 year warranty
Source: Company data, I-Sec research

Analysis of TTK Prestige cookware segment growth rates

TTK Prestige cookware revenues reported 12.1% CAGR over FY11-FY21. Company
recently added 4mn units per annum manufacturing capacity to meet rising demand
for the cookware segment.

Chart 11: Growth of TTK Prestige Cookware segment

5000
4500

4,832
4000

4,332

4,316
4,244

4,149
3500
3000
(Rsmn)

2500
2,752
2,628
2,449

2000
2,266
2,247

1500
1,540

1000
500
0
FY11

FY13

FY15

FY17

FY19

FY21
FY12

FY14

FY16

FY18

Source: Industry data, I-Sec research FY20

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 White Goods & Durables, December 1, 2021 ICICI Securities

Key raw materials used in cookware

The major raw materials used in cookware are aluminum, copper, steel and HDPE.
Due to inflation in raw material prices, we believe the EBITDA margins of the
cookware making companies will remain under pressure.

Chart 12: Inflation in copper prices(Rs/Tonne) Chart 13: Aluminum prices are moving north

Copper Aluminium (Rs/Tonne)

8,00,000 3,00,000
7,00,000
2,50,000
6,00,000
2,00,000
5,00,000
4,00,000 1,50,000
3,00,000 1,00,000
2,00,000
50,000
1,00,000
- -

Nov-18
Dec-15

Dec-20
Jul-15

Jul-20
Mar-17
Aug-17

Sep-19
Jan-18

Feb-20
Jun-18
Oct-16

Apr-19

Oct-21
May-16

May-21
Feb-17

Feb-18

Feb-19

Feb-20

Feb-21
Jun-16

Jun-20

Jun-21
Jun-17

Jun-18

Jun-19
Oct-17

Oct-18

Oct-19

Oct-20
Oct-16

Oct-21

Source: Bloomberg, I-Sec research Source: Bloomberg, I-Sec research

Chart 14: Steel prices are increasing Chart 15: HDPE prices have sharply risen

Steel price (Rs/Tonne) HDPE (Rs/Kg)

80,000 140
70,000 120
60,000 100
50,000
80
40,000
60
30,000
40
20,000
10,000 20

- 0
Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21
Jan-18

Jan-19

Jan-20

Jan-21
Jan-17

May-18

May-20
May-17

May-19

May-21
Feb-16

Feb-17

Feb-18

Feb-19

Feb-20

Feb-21
Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

Jun-21
Oct-16

Oct-17

Oct-18

Oct-19

Oct-20

Oct-21

Source: Bloomberg, I-Sec research Source: Bloomberg, I-Sec research

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White Goods & Durables, December 1, 2021 ICICI Securities

Valuation and risks

We value the stocks on DCF methodology (WACC and TG ranging from 10-13%, 3-
6% respectively). Key upside risk is: better than expected gross margins due to
correction in input prices. Key downside risks: (1) unexpected irrational competition
due to deceleration in general consumption demand, and (2) steep inflation in input
prices.

Table 2: White goods sector valuation summary

CMP RoE (%) RoCE (%) CAGR FY21-24 (%) P/E (x)
Company (Rs) Rating FY23E FY23E Revenues EBITDA PAT FY23E FY24E
Bajaj Electricals 1,074 ADD 17.4 20.0 14.4 24.8 34.2 35.3 27.9
Crompton Consumer 453 ADD 28.2 36.6 14.5 8.4 8.6 41.6 36.0
Dixon 5,097 HOLD 34.5 37.9 45.2 48.5 55.9 72.0 49.3
Havells 1,363 BUY 21.9 24.4 17.7 15.7 22.5 55.3 44.4
TTK Prestige 9,962 ADD 17.2 20.3 15.2 14.6 16.8 42.9 37.5
V-Guard 242 ADD 18.9 22.3 18.2 16.5 20.1 37.1 29.9
Whirlpool 2,010 ADD 16.4 17.5 16.6 28.2 28.0 44.9 34.6
Source: Company data, I-Sec research

Price charts
Havells Crompton Consumer V-Guard Bajaj Electricals
550 300 1,700
1,600
500 1,500
1,400 450 250 1,300
1,200 400 1,100
1,000 350 900
200
800 300
(Rs)

700
(Rs)
(Rs)

(Rs)
250
600 150 500
200
400 150 300
200 100 100 100

May-19

May-20

May-21
Nov-18

Nov-19

Nov-20

Nov-21
May-19

May-20

May-21
Nov-18

Nov-19

Nov-20

Nov-21

May-19

May-20

May-21
May-19

May-20

May-21

Nov-18

Nov-20
Nov-19

Nov-21
Nov-18

Nov-19

Nov-20

Nov-21

Whirlpool TTK Prestige Dixon Technologies

3,000 12,500 7,000
11,500 6,000
2,500 10,500
9,500 5,000
2,000
8,500 4,000
(Rs)

1,500 7,500
6,500 3,000
(Rs)

(Rs)

1,000 5,500 2,000

500 4,500
3,500 1,000
0 2,500 0
May-19

May-20

May-21
Nov-18

Nov-19

Nov-20

Nov-21

May-19

May-20

May-21
May-19

May-20

May-21

Nov-19

Nov-20

Nov-21
Nov-18
Nov-18

Nov-19

Nov-20

Nov-21

Source: Bloomberg

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White Goods & Durables, December 1, 2021 ICICI Securities
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BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

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