Stove Kraft IPO from the Cookware and Kitchen Appliances Maker, is slated to raise Rs. 413 crore and opens on 25h Jan 2021. Stove Kraft IPO comprises OFS and a Rs. 95 crore fresh issue. The offer for sale comprises up to 6,90,700 shares by the promoter Rajendra Gandhi; up to 59,300 shares by another promoter Sunita Rajendra Gandhi; up to 14,92,080 shares by PE investor Sequoia Capital India Growth Investment Holdings and up to 6,007,920 shares by SCI Growth Investments II. Stove Kraft IPO is expected to list by 5th Feb.
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Stove Kraft IPO Details
| Issue Period | 25th January – 28th January 2021 |
| Issue Details | Fresh Issue of Rs. 95 Crores |
| + Offer for Sale of 8,250,000 Equity Shares | |
| Issue Size (₹ Cr) | ₹ 411.80 Cr – 412.63 Cr |
| Price Band | ₹ 384 – 385 |
| Bid Lot | 38 Shares |
| Issue Structure : | |
| QIB | 75% of the offer |
| NIB | 15% of the offer |
| Retail | 10% of offer (~ 1,071,753 Shares) ( ₹ 41.26 Cr) |
| BRLMs | Edelweiss Financial, JM Financial |
| Registrar | KFin Technologies Pvt. Ltd. |
Updates:
- ANCHOR ISSUE: Stove Kraft has raised about Rs 185 crore from 32 anchor investors ahead of its initial public offer. The anchor investors include names like Goldman Sachs India, Nippon Life India Trustee, Bajaj Allianz Life Insurance Company, IIFL Special Opportunities Fund, Integrated Core Strategies Asia Pte Ltd, Sundaram Mutual Fund, Elara India Opportunities Fund, Abakkus Emerging Opportunities Fund, Mirae Asset etc.
About Stove Kraft Limited
- Stove Kraft Limited is one of the largest Kitchen appliance suppliers in India with brands like Gilma and Pigeon.
- The company is planning to manufacture kitchen supplies under the “Black + Decker” brand.
- Its product portfolio has 660+ kitchen solutions including cookware, cooking appliances, household utilities, and others.
- Pigeon branded encompasses products such as free-standing hobs, cooktops, non-stick cookware, LPG gas stoves, and induction cooktops.
- The Gilma portfolio comprises chimneys, hobs, and cooktops etc.
- The company has also started manufacturing Pigeon LED products.
- The company has a strong distribution network.
- Stove Kraft has manufacturing facilities at Bengaluru and Baddi.
- It claims to be the largest stove maker in the country.
Stove Kraft IPO: Financials
| Particulars / Rs. In cr. | 2020(6) | 2019(6) | FY20 | FY19 | F18 |
| Revenue from Operations | 328.84 | 315.51 | 669.86 | 640.94 | 528.95 |
| Revenue Growth (%) | 4.27% | – | 4.51% | 21.17% | – |
| EBITDA as stated | 45.06 | 18.76 | 33.79 | 29.82 | 9.97 |
| Profit Before Tax | 28.78 | 4.75 | 3.53 | 1.22 | (12.56) |
| Net Profit for the period | 28.78 | 4.39 | 3.17 | 0.74 | (12.02) |
| Net Profit (% ) | 9.02% | 2.79% | 3.99% | 4.23% | 5.17% |
| Equity Share Capital | 24.72 | 24.72 | 24.72 | 24.72 | 18.9 |
| Reserves as stated | -54.66 | -83.75 | -84.9 | -88.66 | -199 |
| Net worth as stated | -29.94 | -59.03 | -60.18 | -63.95 | -180.1 |
| Long Term Borrowings | 205.44 | 206.18 | 204.83 | 210.03 | 311.31 |
| Short Term Borrowings | 94.13 | 111.41 | 122.06 | 99.94 | 80.96 |
| Face Value | 10 | ||||
| EPS –Basic (₹ ) as stated | 11.64 | 1.77 | 1.28 | 0.33 | (6.35) |
| Equity Post IPO | 32.55 | ||||
| IPO Price | 385 | ||||
| EPS (Post IPO) FY20 | 0.97 | ||||
| PE | 395.32 | ||||
| EPS ann on sep’21 | 17.68 | ||||
| PE ann Set ’21 | 21.77 | ||||
| Market Cap | 1253 | ||||
| Market Cap / Sales | 1.9 |
Pros
- Has a wide range of kitchen solutions brands with a diverse range of products across various consumer preferences.
- Good distribution network with tie ups with multiple retail channels and a dedicated after-sales network.
- Good Manufacturing capability and backward integration.
- Professional management.
- Increasing Exports
Cons
- The trademark ‘Pigeon’ is the subject matter of litigation.
- Company source their raw materials from third parties with no long term contract.
- There are various proceedings involving the Company, their Promoters and their Director.
Stove Kraft IPO: Assessment
- Issue represents 32% of post issue capital.
- Only 10% of the Stove Kraft IPO is offered to retail. This is due to losses made by the company in FY18.
- Super jump in profits in H1Fy21 and poor performance in earlier years is sometimes indicative of dress up before the IPO issue. This also looks attributed to lower cost on travelling, advertisement on account of Covid-19.
- It cannot be said with certainty that good show in H1FY21 will be sustained in future.
- Stove Kraft IPO has been paged at 34.5x PE on TTM basis. On FY20 basis, the Company’s IPO priced its issue at 395x PE on FY20 earnings.
- Company has shown TTK Prestige, Hawkins Cookers and Butterfly Gandhimati as its listed peers.
- The company has contracts with e-commerce majors like as Amazon, Flipkart for the sale of its products.
- Stove Kraft has strong manufacturing base with 80 percent of its products being manufactured locally while the rest is imported.
- Anchor response has been god and current GMP is reported in 100+ range.
- Looking at past performance, Stove Kraft IPO seems to be priced rather aggressively.
- From my stand point, Stove Kraft IPO is not a fully clear case and is under watch. Despite lackluster performance in past, it could also be an emerging brand in kitchen ware space and hence needs to be tracked. I would apply only if there is strong QIB demand for the IPO.
- Do check this page for any last minute updates
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.