Stove Kraft Limited is a kitchen solution and home solutions company that has been in existence for over two decades. It is a leading brand for India’s kitchen appliances and a dominant player in the pressure cookers segment.
The company offers diverse kitchen solutions under ‘Pigeon’ and ‘Gilma’ brands. ‘Pigeon’ brand contributed 77% of its revenues for the year ending March 2020, selling products like non-stick cookware, LPG gas stoves, etc. Under the ‘Gilma’ brand, the company sells products like chimneys, hobs, and cooktops and contributed 5% revenue during the same period. The company manufactured 80% of products under these two brands in its manufacturing facilities at Bengaluru (Karnataka) and Baddi (Himachal Pradesh).
In 2016, Stove Kraft entered into an exclusive ‘Black + Decker’ brand licensing agreement with Stanley Black and Decker, Inc. As per the arrangement, the company sells and services products of this brand like blenders, juicers, breakfast appliances, etc. Stove Kraft proposes to commence manufacturing of products under this brand.
- Diverse range of products across consumer preferences
- The company has a widespread distribution network with 651 distributors in 27 states and five union territories in India. The company connects with over 45 thousand retail outlets across the country’s length and breadth through this network. Internationally, currently the company exports to 14 countries
- Company’s products also made available via retail outlets like Metro and Cash and carry and on e-commerce channel through Flipkart
- Experienced management team and company’s existence in this sector for more than two decades
Amount in Rs. Cr excluding per share data
- Stable revenue stream but thin margins
- Low return on net worth
Offer and Deployment of Net Proceeds
|Amount (In Rs Cr)
|Rs 95 Cr
|Offer for Sale of 82,50,000 shares
|Rs 318 Cr
|Total issue size
|Rs 413 Cr*
*Offer related expenses will be deducted
Deployment of funds
- Rs 76crs will be used to repay/prepay borrowings of the company during the year ending March 2021
- General corporate purposes
- Stove Kraft operates in India’s kitchen appliances market, where the outlook is positive due to India’s high proportion of the young and working population
- Rise of the middle class, growing urbanization, and higher household income will be drivers of the improving consumerization and, in turn, expanding kitchen appliances market in India
- The Indian manufacturing industry has recently witnessed high growth, further propelled by the ‘Make in India’ initiative
- Vast distribution network and presence over retail channels and e-commerce is beneficial
- Highly competitive market landscape, ever-changing consumer preferences, and seasonality of business are critical threats to prospects
- A longer-term stable revenue performance could have better supported the current offer price which is at a significantly high P/E vs the listed peer group
The information provided in the red herring prospectus filed with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend the reader validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks and should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.
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