Tips to save IPO listing gains tax!
In the years 2023 and 2024, many IPOs brought huge earnings for the investors. But tax also has to be paid on this! What is the tax rule on booking listing gains from IPO? How can tax liability on listing gains be reduced? How will the tax be calculated on selling IPO shares?
TTK Prestige, which started its journey 60 years ago, has been doing wonders on Dalal Street. With a rally of more than 8,900%, it has changed the fortunes of investors in just 12 years. Shares of the company have climbed to Rs 9,000 on June 9, 2021 from Rs 99.25 in June 2009. That means a Rs 1,00,000 investment made in the stock 12 years ago would have fetched over Rs 90 lakh at present.
Over the years, the net profit and sales of the company have grown consistently. Sales have grown by over 15% annually, while profit at 22% since 2009.
Its listed peer Hawkins Cookers rallied 1,827% between June 2009 and June 2021, while Gandhimati Butterfly advanced nearly 3,400% in the same period. On the other hand, the benchmark BSE Sensex has gained 265%.
Should you buy?
Analysts hold their bullish view on TTK Prestige after its stellar performance in Q4. It is the flagship company of TTK group which mainly operates in the kitchen appliances segment. The company has five manufacturing plants and a strong distribution network, including 620 Prestige Xclusives.
The company last month posted a consolidated net profit of Rs 85.36 crore in the March quarter against Rs 8.60 crore in the same quarter last year. Revenue from operations increased by 43% YoY to Rs 598.03 crore. Geojit Financial Services has a ‘Buy’ call on TTK Prestige with a price target of Rs 9750.
“Sharp surge in commodity prices impacts the cost of production, but the company is able to pass on and gross margin improved 310 basis points YoY. TTK has almost doubled its capacity for the cookware segment and has significantly expanded distribution in FY21 in high growth areas. The second wave of Covid-19 is likely to impact in the near-term, but the long term-demand outlook is positive given ongoing vaccination and strong thrust of government to revive the economy,” the brokerage said.
Likewise, Cholamandalam Securities is also positive on TTK with a price target of Rs 9,480. It added that TTK Prestige’s FY21 has aggressively expanded its distribution network by adding new outlets (especially in non-metro cities).
“The company is further looking to enhance its distribution reach in tier-II, III cities to capture long term growth opportunities. We expect the rising health awareness among the consumers to drive preference for home-cooked food while increasing the demand for kitchen appliances. We expect the strong momentum seen in online sales coupled with recovery in rural demand and softening of raw material prices to drive earnings going forward,” Cholamandalam Securities said in a report.