STOVEKRAFT - STOVE KRAFT LIMITED Share Price

Management Outlook:
StoveKraft anticipates sustained growth driven by strategic initiatives, including:

• Partnerships: A multi-year collaboration with IKEA to supply cookware globally from FY26, targeting ~INR 150 crore annual revenue initially, expanding exports to 25% of total business in 3"“4 years.
• Capacity Expansion: New 1.8 lakh sq.ft. facility for IKEA and a cast iron foundry (2.2 million units/year, scalable to 4.4 million) to support domestic and export demand.
• Product Diversification: Entry into personal care (hair dryers/trimmers via e-commerce) and premium appliances (OTGs, air fryers), with small appliances contributing ~45% of Q3 revenue.
• Retail Expansion: Targeting 25"“30 new COCO/COFO stores quarterly (230 total), enhancing regional penetration.

Financial Targets:

• Revenue: Aiming to outperform industry growth (historically 8"“10% above peers), leveraging automation and expanded capacity to potentially double revenue without major Capex.
• Margins: EBITDA margin improvement to 11%+ in FY25 (10.7% YTD) via cost optimization; gross margins stable (~38%) despite temporary Q3 discounts.
• Exports: Shift from PTFE to ceramic-coated cookware to revive growth, with IKEA/Walmart as key drivers.

Operational Focus:

• Efficiency: Automation, supply chain digitization, and working capital reduction (45 days in Q3 vs. 59 in FY24).
• Capex: INR 15"“20 crore for IKEA facility; annual maintenance Capex of INR 25"“35 crore.
• Demand: Positive impact from tax cuts, premiumization (stainless steel cookers, OTGs), and CSD network expansion.

Challenges: Near-term softness post-festive season, but innovation and channel mix (34% e-commerce) to sustain momentum.

Question: How do we see growth going ahead? Have we seen consumer sentiments weakening post festive? How are broader consumer sentiments and growth shaping up?
Answer: Consumer sentiments are stable, with continuous growth driven by special offers. StoveKraft aims to grow faster than the industry, leveraging operational improvements, new products, and channel expansion.

Question: By when will the IKEA partnership contribute to financials, and what is the opportunity size?
Answer: Supplies to IKEA will start in Q3/Q4 FY26, with initial annual revenue of ~Rs.150 crore from 2.5"“3 million cookware pieces. The partnership includes future product lines, global best practices, and a Rs.15"“20 crore CAPEX.

Question: Is there a revision in top-line guidance given Q4's softness?
Answer: FY25 growth may slightly lag historical 19% CAGR due to demand softness, but new initiatives and products aim to restore higher growth.

Question: Why did gross margins decline in Q3, and will they recover?
Answer: Gross margins dipped due to seasonal discounts in Dec-Jan but remain stable annually (~38%). Margins are expected to normalize post-offers.

Question: Will EBITDA margin reach 11% for FY25 despite 10.7% in 9M?
Answer: FY25 EBITDA margin will likely align with 11% guidance, with minor variance possible. Operational efficiency and automation support margin improvement.

Question: What is the revenue potential of the IKEA partnership?
Answer: Exports (including IKEA) are targeted to reach 25% of total revenue in 3"“4 years. IKEA could contribute 50% of export sales, scaling with new product ranges.

Question: How will retail store expansion impact costs?
Answer: StoveKraft adds 25"“30 stores/quarter (COCO/COFO models), targeting 80"“100 stores annually. Rent/depreciation costs are manageable, with breakeven at Rs.2.5 lakh/store revenue.

Question: What drives small appliance growth (45% of revenue) and margins?
Answer: Small appliances grew 25.6% YoY due to premium products like OTGs. Margins are channel-agnostic, with consistent profitability across categories.

Question: How is working capital improving?
Answer: Net working capital days reduced to 45 in Q3 FY25 (vs. 59 in FY24) through supply chain optimization and inventory management.

Question: What is the CAPEX outlook?
Answer: FY26 CAPEX will be Rs.25"“35 crore (maintenance + IKEA automation). Existing capacity supports doubling revenue (up to Rs.3,000 crore) with minimal expansion.