Stove Kraft IPO: Should you invest?

23 Jan 2021  Read 1541 Views

IPOs are not going away easily. Just like Yuvraj Singh's back-to-back sixes, IPOs this year are also hitting back-to-back into the primary market. After IRFC, Indigo Paints IPO and HFFC IPO, Stove Kraft IPO is now making its way into the public market. 

You must have seen, heard about or used kitchen appliances brands "Pigeon" or "Gilma". Well, Stove Kraft is the home of "Pigeon" and "Gilma". Stove Kraft deals in the kitchen appliance business, and it is one of the leading companies in this segment.

Stovekraft's IPO will open for subscription from Jan 25 till Jan 28 with a price range of Rs. 384-385 each with a face value of Rs.10. This IPO comprises a fresh issue of shares worth Rs. 95 crore and an offer-for-sale (OFS) of up to 82.50 lakh equity shares. 

KFintech Pvt. Ltd. Is the registrar of the IPO.

Let's get into the company details and analyze the investment prospects. 

About Stove Kraft

Stove Kraft is a kitchen appliance company which was incorporated in 1999. The company is now one of the leading companies in the kitchen appliance segment. Stovekraft is manufacturing a wide range of kitchen solution products under the brand names of "Pigeon" and "Gilma". Both the brands have a presence of more than 15 years in the market and have goodwill among consumers for reasonable pricing and good quality. 

The company is also planning to start manufacturing a completely new range of value, semi-premium, premium kitchen appliances under the brand name of "Black + Decker". The company has contracts with e-commerce players such as Amazon, Flipkart for the sale of their product line.

Stove Kraft has received ISO 9001:2008 certificate for being the industry leader in kitchen appliances in India. The company is a market leader in categories like pressure cookers, freestanding hobs and cooktops. Additionally, White Page International has listed the brand "Pigeon" as one of "India's Most Admired Brands 2016".

Stove Kraft is also engaged in the export business. The company is exporting its products to 12 countries comprising UAE, Qatar, Bahrain, Kuwait, Iran, Tanzania, Uganda, Nepal, Philippines, Sri Lanka, UK, and the Netherlands.

The company is manufacturing original pieces of equipment under its brand for retail chains in the USA and Mexico.

Stovekraft has also increased its distribution network around the country in 2020 to realize the demand for certain products and to realize new business opportunities. Due to this reason, the company has expanded to 27 states and 5 union territories as of September 2020. 

The distributors of the company have increased from 429 in October 2019 to 651 in September 2020, a massive increase of 51% in a year. The retail outlets of the company have also increased from 38,090 in October 2019 to 45,475 in September 2020, an increase of 19%.

Competitive Strength of the company

  • The company has a huge award-winning product line, well-recognized brand names in the kitchen appliance segment for the consumer.
  • The company has a distribution network around the country along with retail outlets and after-sales networks for services of the product.
  • The company has a robust manufacturing capability.
  • The company is focusing on innovative and quality products for the consumer.
  • Company's management has a successful track record in the kitchen solution segment with a diverse and talented workforce.
  • The company also has a successful track record with regards to sales and financial stability.

Financial Performance of the company

Particulars

For the year ended (in million)

 

30-Sept-20

31-Mar-20

31-Mar-19

31-Mar-18

Total Assets

4,984.99

4,712.91

4,257.26

3,936.42

Total Revenue

3,295.09

6,729.14

6,425.98

5,345.85

Profit After Tax

287.76

31.70

7.36

(120.18)

Future Strategies of the company

  • The company is currently increasing its customer reach and plans to do so in future as well.
  • The company is planning to increase promotion, digital marketing, and increase the goodwill of its brand.
  • With innovation, the company is planning to further increase its product line.
  • The company plans to invest in new manufacturing units and increase automation in current manufacturing units.
  • The company has entered into the LED lighting business and plans to increase its LED lighting business in future.
  • The company is keen to increase its exports.

Stove Kraft IPO Details

IPO Opening Date

Jan 25, 2021

IPO Closing Date

Jan 28, 2021

IPO Price

₹384 to ₹385 per equity share

Issue Type

Book Built Issue IPO

Listing At

BSE, NSE

Face Value

₹10 per equity share

Market Lot

38 Shares

Min Order Quantity

38 Shares

Issue Size

Eq Shares of ₹10
(aggregating up to ₹412.63 Cr)

Fresh Issue

Eq Shares of ₹10
(aggregating up to ₹95.00 Cr)

Offer for Sale

8,250,000 Eq Shares of ₹10

Stove Kraft IPO Lot Size

Application

Lots

Shares

Amount (Cut-off)

Minimum

1

38

₹14,630

Maximum

13

494

₹190,190

Stove Kraft IPO Tentative Timetable

IPO Open Date

Jan 25, 2021

IPO Close Date

Jan 28, 2021

Basis of Allotment Date

Feb 2, 2021

Initiation of Refunds

Feb 3, 2021

The credit of Shares to Demat Account

Feb 4, 2021

IPO Listing Date

Feb 5, 2021

The objective of the IPO

  • The company is planning to repay its borrowings fully or partially from the raised fund.
  • The other objective of the IPO is to meet corporate purposes expenditure.

                         

Risk Factors

  • Stovekraft has faced losses in FY2018 and has managed to generate thin margins in FY2019 and FY2020.
  • The Pigeon brand trademark is facing a lawsuit, and hence there isn't any assurance that companies can protect it in the future.
  • The company is currently procuring raw material from third parties, but they don't have any long-term contract or price guarantees with them.
  • Sales of the company can be impacted by stiff competition from competitors.
  • The COVID-19 pandemic has impacted its business and may continue to do so even in future.
  • The company's business is extremely dependent on the brand portfolio. Any disruption in maintaining the brand portfolio can hamper its business.
  • The company and its promoters and directors are facing a lot of lawsuits. Any verdict against them can impact the company's business.
  • Stove Kraft promoter and MD Rajendra Prasad hasn't filed the annual return for a company called PAPL where he is also one of the directors. For this reason, he may have to leave his position of directorship at Stove Kraft.

Stove Kraft IPO Lead Managers

  • Edelweiss Financial Services Ltd
  • JM Financial Consultants Private Limited

Closing Words

Stove Kraft is one of the market leaders in the kitchen appliance segment. The company has a huge future growth prospective. Considering this, investors can think of investing for listing gains and long-term perspective.

However, it's better to check all the pros and cons, and strengths and risks of the IPO and then take a proper decision on investing, keeping in mind your financial goals.

About the Author: Harshit Roy | 34 Post(s)

Harshit Roy is a BMS student at St. Xavier's College, Kolkata majoring in finance. He is bibliophile in nature, and quite eager to learn and read about new things in life.

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