Detailed Narrative
Q1 FY26 Performance Overview
Stove Kraft reported a strong Q1 FY26, with revenue reaching ₹340.1 crores, marking an 8.2% year-on-year and 8.7% quarter-on-quarter growth. This performance was attributed to robust demand across e-commerce, retail, modern trade, and export channels. EBITDA margin expanded by 40 basis points to 10.5%, and PAT grew significantly by 27.2% year-on-year to 3.1% of revenue, demonstrating improved operational leverage and manufacturing capabilities.
Product Mix and Margin Expansion
The company is strategically shifting towards higher-value products like chimneys, cast iron cookware, and tri-ply cookware. New categories, particularly cast iron, contributed ₹177 million in Q1. This premiumization, coupled with in-house manufacturing capabilities, is driving gross margin improvement, with a 13 basis point increase year-on-year. Management expects gross margins to reach 40% in the steady state and improve by at least 1% over last year for FY26.
Channel Strategy and Growth Drivers
Stove Kraft's multi-channel strategy is yielding results, with all major channels reporting growth. E-commerce, traditional retail, and modern trade continue to deliver steady growth, while quick commerce is gaining meaningful traction. OEM exports now account for 20% of total revenue. While the General Trade (GT) channel's growth is muted, it is not experiencing cannibalization, as other channels are growing at a faster pace.
Export Market and IKEA Partnership
Exports showed strong positive momentum, growing 14% compared to Q1 FY25. The company aims for 50% export growth for the full FY26, building on last year's ₹160 crores. The partnership with IKEA is progressing, with dispatches expected to commence from December 2025. This collaboration is anticipated to generate ₹200-300 crores in revenue over the next two to three years, with full-blown business expected by FY27-28.
Capital Expenditure and Debt Management
The company has largely completed its planned CAPEX requirements over the last four years. For FY26, the CAPEX guidance is approximately ₹50 crores, including an exclusive investment of ₹30 crores for the IKEA partnership. Net debt stood at ₹220 crores as of June 2025, and management expects continuous improvement in debt reduction, aiming to be very close to debt-free by the end of the year, supported by strong cash flow generation.
Market Dynamics and Competition
Despite recent tariff disruption🌐s between the US and India and geopolitical situations, Stove Kraft's markets remained stable. The company acknowledges competition, including Reliance's entry into small appliances. However, its strategy of focusing on higher ASP products and in-house manufacturing provides a competitive edge. The company also noted a rationalization of depreciation due to re-estimation of lease terms for retail stores, which will continue throughout the year.