TTK Healthcare (TTKH), a part of the TTK group is present across businesses like pharmaceuticals, consumer products, medical devices and foods. The company has leading brands like Woodward’s Gripe Water with more than 50% market share and Eva which is a leader in women’s deodorant segment. TTKH’s continuous advertisement spend has resulted in suboptimal RoE, although the same is expected to reap benefits in the long term. With termination of the low margin condoms distribution business, the top-line is expected to be impacted by ~20%. The company’s increasing focus on branded foods – a high RoE business, and orthopaedic implants – a niche product in a nascent stage; provide long term growth opportunities. We initiate coverage on the stock, with a Buy recommendation and a target price of `643.

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