Stove Kraft IPO: Information Analysis

Starting its journey almost two decades ago, Stove Kraft Limited, a company promoted by Rajendra Gandhi, is involved in manufacturing, marketing and exporting kitchen appliances. The company markets its products under the three brands - Pigeon for the mass market; Gilma for the semi-premium category and BLACK + DECKER (under a license agreement with Black and Decker Corporation, the USA) for the premium category. It provides a gamut of kitchen products, including LPG gas stoves, induction cooktops, non-stick cookware, pressure cookers, chimneys, etc. It retails them directly through various channels and has also partnered with three oil-marketing companies (OMCs), HPCL, BPCL and IndianOil, to provide cooktops with new gas connections. The company has also made a foray into manufacturing LED bulbs and other household products, such as floor mops, buckets, dustbins, water bottles, etc. The market for cooking appliances and non-stick cookware was estimated at Rs 20,670 crore in 2020 and is expected to grow at a CAGR of 11 per cent in the next five years. Stove Kraft aims to leverage its manufacturing expertise, strong brand recall and wide distribution network to expand its product portfolio and grow significantly in the coming years. During FY2018-FY2020, its revenue grew at a CAGR of 12.5 per cent and its EBITDA margins grew to 13.7 per cent in H1 FY2021 from 1.9 per cent in FY2018. Strengths Manufacturing: The company operates two backward integrated manufacturing facilities in Bangalore (Karnataka) and Baddi (Himachal Pradesh). Almost 80 per cent of its products are manufactured in-house, with the remaining being sourced from other original-equipment manufacturers. While the Bangalore facility has a capacity of 38.4 million units and manufactures products for the brands, Pigeon and Gilma, the Baddi facility has a capacity of only 2.8 million units and focuses on manufacturing products which are co-branded with OMCs. Its factories in Bangalore and Baddi have a capacity utilisation of only 21 per cent and 17 per cent, respectively. So, if there is an increase in demand, it can easily cater to that. Multiple brands, distribution channels: The company caters to customers across the spectrum through its different brands, Pigeon, Gilma and Black + Decker. Apart from having a pan-India reach (including e-commerce), the company exports its products to the Indian diaspora across 12 countries and sells directly to retail chains in Mexico and the USA. Growth