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Stove Kraft Ltd IPO

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Stove Kraft Limited, kitchen appliances manufacturer is coming up with its Initial Public Offering on Monday, January 25. The issue will be open until January 28 at a fresh issue of shares aggregating up to ₹95 crore.

Offer Details:

The total issue size is ₹413cr, which consist of Fresh Issue of ₹295cr and Offer for sale of ~0.83cr shares aggregating to ₹318cr at the upper end of the price band. Of the net proceeds from the fresh issue, ₹76cr is proposed to be utilized towards repayment/ pre-payment, in full or part, of certain borrowings availed by the company.


Stove Kraft IPO Promoter Holding

 

% Shareholding

Pre-offer

Post-offer

Promoter Group

61.3

54.4

Public

38.7

45.6

Total

100%

100%

Post Issue percentage is at upper price band 


Stove Kraft IPO Investor Category

Share Reservation

% of net issue

QIB

75

NII

15

Retail

10

Stove Kraft Ltd IPO Subscription Details

Company

Stove Kraft Ltd

Issue Type

(Book Built Portion)

Issue Size (In ` Crore)

412.63

Lot Size

38 equity shares

Open Date

25 Jan

Close Date

28 Jan

Offer Price

₹384 to ₹385 per equity share

DRHP

Click here

Subscription Status

Category Subscription Status Shares Offered
Qualified Institutional 8.02 Times 3,215,260
Non Institutional 32.72 Times 1,607,629
Retail Individual 26.04 Times 1,071,753
Employee - -
Others - -
Total 3.70 Times 5,894,642

Stove Craft Ltd IPO Subscription Details (Day by Day)

Date NII Retail Total
Jan-25-2021 17:00 0.05x 5.37x 0.99x
Jan-27-2021 17:00 1.85x 13.08 2.93
Jan-28-2021 17:00 32.72x 26.04x 18.03x



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About Stove Kraft Ltd IPO

Stove Kraft Limited is engaged in the manufacture and retail of a wide range of kitchen solutions under the brand names Pigeon and Gilma. These both brands have enjoyed a market presence of over 13 years and enjoy a high brand recall amongst customers for quality and value for money. 

The company offers a wide array of products covering these categories via its affordable (Pigeon, ~86% FY20 revenues), semi-premium (Gilma, ~3% of revenues) and Premium (BLACK + DECKER) segments.

As of September 30, 2020, Stove Kraft manufactures 79.75% of its Pigeon and Gilma branded products at its well-equipped and backward integrated manufacturing facilities at Bengaluru (KT) and Baddi (HP), which helps in monitoring and controlling quality and cost.

These facilities are well connected with nine strategically located C&F agents. The company has separate distribution network for each of our “Pigeon”, “Gilma” and “BLACK + DECKER” brands. Stove Kraft has 651 distributors in 27 states and five union territories of India and 12 distributors for its products that are exported. The C&F agents and Distributors are connected to with a dealer network comprising of over 45,475 retail outlets which are driven through a sales force of 566 personnel. The “Gilma” brand products are sold through 65 exclusively branded outlets owned and operated by franchisees across four states and 28 cities and towns. The company also exports under Pigeon brand or as OEM manufacturer to countries in North America, Middle East, Africa and the Indian subcontinent.


Financials

Consolidated

FY19

FY20

FY21E

FY22E

FY23E

Revenue (₹Cr)

641

670

697

792

897

EBITDA %

4.7

5.0

12.0

9.0

8.9

EPS (₹)

0.2

1.0

16.4

16.2

14.5

PE (x)

1,709.6

396.6

23.5

23.7

26.6

EV/EBITDA (x)

51.7

46.5

15.1

17.3

15.4

ROE (%)

-

-

19.5

17.0

13.8

ROCE (%)

4.9

8.2

20.5

16.3

13.5

Source: RHP, 5paisa Research

Key Points

Wide product portfolio and focus on brands to drive growth:

Although the growth rate in recent years is appearing low, the same can be attributed to strategic move to reduce co-branding business with OMCs and focusing more on its own brands. As per DRHP, RHP and industry reports, its key categories like pressure cookers and non-stick cookware have posted volume CAGR of ~25% and ~20%, respectively over FY17-20. We believe that the other categories can maintain mid to high teens volume growth while scale up of premium segment, product portfolio expansion, geographic diversification and bottoming out of mid-premium segment can aid revenue growth.

Operating leverage and debt reduction to sustain profitability:

~776bp YoY jump in H1FY21 EBITDAM has been due to factors like low promotion (~230bps), conveyance (~110bps) and employee (~300bps) related expenses among others. As per management, the advertisement spends are likely to return to normal levels in FY22E. We expect operating leverage to result in EBITDAM of ~9% during FY22E-23E. Moreover, post debt reduction form net proceeds, the company is likely to be net-debt free which will also aid profitability.

Key Risk Factor:

Numerous Litigations and legal proceeding:

 

 As per the risk factors, the ‘Pigeon’ is the subject matter of litigation, where the company had permitted an associate company to manufacture certain products under the said brand. Also, the same associate company has not filed annual returns for more than three years where the company’s promoter is one of the directors. As per the management the company is not defunct, the independent chairman is taking the necessary steps to file the returns and they believe that they have the necessary exemption with regards to issues pertaining to this associate company. However, there are other various issues criminal complaint for operating   the old facility without obtaining the requisite consents under Air Act and failure to obtain requisite approvals for carrying out industrial development program at a portion of land which is part of the Bengaluru facility.

 

Geographic Concentration:

 

During the six month periods ended September 30, 2020 and September 30, 2019 and Fiscals 2020, 2019 and 2018, the revenues from sales in southern Indian states accounted for 47.76%, 61.74%, 50.84%, 60.50% and 61.54%, respectively of total income, respectively. Any event negatively affecting these states, including but not limited to economic downturn, natural disasters or political unrest, could have a material adverse effect on our business and results of operations.

Outlook & Valuation:

We believe that focus on own brands, portfolio and geographic expansion can aid overall revenue CAGR of ~10% over FY20-23E. Our margins result in a flattish EBITDA growth while benefits from lower interest cost would get negated by tax incidence in FY23E from nil tax during FY21-22E. The higher price band of ₹385 implies FY23E P/E of ~27x, which is reasonable in our opinion.

How to apply IPO on 5paisa app?

  • Login to your 5paisa Mobile Trading App and select Stove Kraft IPO in the current IPOs section
  • Enter the number of lots and price at which you wish to apply for
  • Enter your UPI ID and click on submit. With this, your bid will be placed with the exchange
  • You will receive a notification to block funds in your UPI app
  • Approve the block request

Stove Kraft Ltd IPO Frequently Asked Questions

Stove Kraft Ltd, kitchen appliances manufacturer is coming up with its Initial public Offerings on January 25 with the public issue comprising a fresh issue size of ₹412.63Cr.

You can apply for the Stove Kraft IPO using any supported UPI apps. To Apply on 5paisa App follow the procedure mentioned above. For further details Click Here.

Stove Kraft IPO will open on January 25, 2021.

Stove Kraft IPO Lot size is 38 equity shares, that means you can apply for one lot consisting 38 equity shares.

Shares of Stove Kraft will be getting allotted on 02nd February,2021.

Stove Kraft Shares will be getting listed on 05 February, 2021.

Here is the minimum investment calculation of Stove Kraft IPO
Lot size – 38 * Issue Price ₹385 = ₹14,630
Hence the minimum investment amount required to invest in Stove Kraft IPO is ₹14,630. As per the maximum limit that is allowed by SEBI you can apply for 13 lots.

No, one bank account one IPO application is allowed.

Cut off Price for Stove Kraft IPO is ₹14,630


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Contact Details of Stove Kraft Ltd IPO

Company Contact Information

Stove Kraft Ltd IPO
81/1 Medamarana Halli Village,
Harohalli Hobli KanakapurTaluk,
Bangalore Rural, Karnataka 562112.

Phone: +91 80 2801 6222
Email: vivek.mishra@stovekraft.com
Website: http://www.stovekraft.com/

Stove Kraft Ltd IPO Register

KFin Techologies Pvt Ltd

Stove Kraft Ltd IPO Lead Manager(s)

  • Edelweiss Financial Services Ltd
  • JM Financial Ltd

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