Stove Kraft — Q3 FY26 earnings call

Call held 31 Jan 2026

Management summary

Stove Kraft reported a mixed Q3 FY26, with consolidated revenue declining 6.4% YoY to INR 378.4 crores and PAT falling to INR 4.1 crores, impacted by one-time expenses and challenging export conditions. However, the company achieved strong domestic volume growth in small appliances (38%) and pressure cookers (9%), improved its 9M gross margin to 38.8%, and significantly reduced working capital debt by INR 80 crores. The company remains confident in its domestic growth strategy and expects IKEA revenues to commence next year despite a 3-month delay.

Highlights

  • 9M FY26 consolidated revenue grew 4.9% YoY to INR 1,192.9 crores.

  • 9M FY26 gross margin improved by 79 bps YoY to 38.8%.

  • Working capital days reduced to 43 from 64 in FY25.

  • Working capital debt reduced by INR 80 crores to INR 80.6 crores.

  • Pigeon brand recorded a YTD CAGR growth of 9.3%.

Concerns

  • Q3 FY26 consolidated revenue degrew 6.4% YoY to INR 378.4 crores.

  • Q3 FY26 PAT degrew to INR 4.1 crores from INR 12.1 crores in Q3 FY25.

  • One-time expense of INR 4.65 crores incurred in Q3.

  • Export sales faced headwinds, leading to a Q3 degrowth of INR 27 crores.

  • IKEA business ramp-up delayed by 3 months, with revenue now expected from Q1 FY27.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹378.4 Cr
    YoY -6.4%
  • Gross Profit
    ₹149.2 Cr
    YoY -1.7%
  • Gross Margin
    39.4%
  • EBITDA
    ₹35.3 Cr
    YoY -12.9%
  • PAT
    ₹4.1 Cr

9M

  • FY26 Revenue
    ₹1,192.9 Cr
    YoY +4.9%
  • FY26 Gross Profit
    ₹462.4 Cr
    YoY +7.1%
  • FY26 Gross Margin
    38.8%
  • FY26 EBITDA
    ₹127.7 Cr
    YoY +5.4%
  • FY26 PAT
    ₹35.9 Cr
  • FY26 CFO
    ₹242 Cr

What they filed

Q1 FY27: revenue up 41.5%, net profit up 70.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue418 404 313 340 474 +13%378 −6%415 +33%481 +41%
EBITDA49 41 29 36 57 +16%34 −17%39 +34%54 +50%
Net profit17 12 1 10 21 +24%4 −67%6 +500%17 +70%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • 9M FY26 Channel Contribution
    38.5% General Trade34% E-commerce12% Modern Trade3.3% Corporate Sales8.5% Own Retail3.7% OEM Export

Capital allocation

high confidence
  • Capex Capex disclosed
    The capex payments, net would have paid INR63 crores. We have paid INR63 crores.
  • Debt Net ₹80.6 Cr
    This translated into a significant reduction in working capital debt which has come down to INR80.6 crores at the end of quarter 3.

Guidance & targets

Revenue

  • Pigeon Brand Growth Revenue · annualized · Medium confidence higher than double-digit baseline

    Previously 15% → higher than double-digit baseline

    I can say that -- while our aspiration is there, we will still be on the double digit. Though you don't see the double digit, we are at about 9% on the Pigeon growth for this quarter. But for the annualized, we will still be better than I mean, if not at the 15% definitely higher than the double-digit base line.

    — Rajendra Gandhi

  • IKEA Revenue Contribution Revenue · next year (FY27) · Medium confidence meaningful
    IKEA with its global presence beyond the US continues to offer strong long-term growth potential. ... meaningful revenue contribution expected next year.

    — Rajendra Gandhi

  • Q4 Revenue Revenue · Q4 FY26 · Medium confidence closer to INR 400 crores
    So you will have to do almost INR400 crores of top line in Q4 and... Hopefully, we should be closer to that, hopefully.

    — Rajendra Gandhi

Margin

  • Gross Margin Improvement Margin · year-on-year · High confidence at least 1%
    You will see improvement on both our gross margin, EBITDA margin and the price margins, at least 1% year-on-year.

    — Rajendra Gandhi

  • EBITDA Margin Improvement Margin · year-on-year · High confidence at least 1%

    — Rajendra Gandhi

  • Gross Margin Target Margin · next 3 years · Medium confidence 41-42%

    From 39% today

    So currently, we are targeting to get to 39%. And we believe that year-on-year, we'll be able to improve this by 1%. So you can take this kind of a guidance. It may not be absolutely like that, but a kind of guidance in the next 3 years, we would want to get to between 41% and 42%.

    — Rajendra Gandhi

Debt

  • Normal Debt (Bank Borrowing) Debt · by year-end · High confidence close to 0
    Normal debt should be close to 0. So debt is the money that we borrow from the bank will be close to 0.

    — Rajendra Gandhi

Market context

  • Domestic Revenue Growth Revenue · next 2-3 years · High confidence double-digit
    Yes, we are very confident, sir. [on taking double-digit growth for the next 2, 3 years, on the domestic]

    — Rajendra Gandhi

What to watch in Q4 FY26

IKEA Revenue Commencement

Q1 FY27
Current Delayed, expected to start next year (FY27)
Target Actual revenue commencement from Q1 FY27

Why it matters

Significant long-term growth potential and diversification from US exports.

IKEA business remains on track with business likely to commence at the end of the quarter -- coming quarter and meaningful revenue contribution expected next year. ... actual revenue will start from first quarter of April FY '27.

Risks & concerns

  • Global Economic Uncertainty and Inflation

    high

    Persistent inflationary pressures in advanced economies and geopolitical situations impacting discretionary consumption.

    Management acknowledged

  • Export Headwinds and Tariffs

    high

    Persistent uncertainty surrounding trade negotiations and tariff structures between India and the United States affecting export sales.

    Management acknowledged

  • Commodity Price Volatility

    medium

    Volatile commodity markets necessitate passing on price increases to consumers, though protected for a quarter.

    Management acknowledged

  • IKEA Project Delays

    medium

    IKEA business ramp-up delayed by 3 months due to test protocols and approval processes.

    Management acknowledged

Q&A highlights

5 direct
Export Headwinds and IKEA Delay Direct
So there are 2 aspects to the export. We did have some challenges in the first quarter and which we had to complete those orders in the second quarter. So there was a stack-up of the inventory at the customer's point. And so from the fourth quarter, it is back to normal on that particular -- and we have developed 3 other product categories for exports.

Clarified the reasons for Q3 export decline (inventory build-up, tariff uncertainty) and provided an update on IKEA project delay.

Asked by Varun Ghia

Mixer Grinder Category Strategy Direct
So we believe that mixer grinder is a cluttered category. And we believe that it is a margin drainer. We'll continue to be in the mixer grinder until, unless we innovate, we are able to get some cutting-edge innovation I don't see very high numbers coming from mixer grinder.

Revealed management's view on the mixer grinder segment as low-margin and cluttered, indicating a strategic focus on overall appliance leadership rather than just this category.

Asked by Rachna K

Cooktop Business Decline and Channel Strategy Direct
No, we are growing the cooktop business, both in induction and gas top. But we let go one channel completely in the past. We were leaders in the channel. It was a co-branded channel with the oil companies, which we completely let go. So we are building the cooktop business minus that channel.

Explained the reason for the perceived decline in cooktop business (exit from a co-branded channel) and confirmed growth in other channels.

Asked by Rachna K

Domestic vs. Export Sales Breakup Partial
In our numbers we don't separately give domestic sales and exports sales. Okay. We'll try to add an addendum to this presentation itself.

Analyst requested a crucial data point for understanding business drivers, and management committed to providing it in an addendum.

Asked by Anand Mundra

Debt-Free Guidance Clarification Direct
So the debt is absolute debt. I said, cash debt. ... That INR80 crores includes suppliers' credit that we take. Let me explain in simple words that I can explain to you. We will have 0 CC or WCDL or any working capital loan.

Clarified the definition of 'debt-free' and the components of the INR 80 crores debt, distinguishing between bank borrowings and supplier credit/lease liabilities.

Asked by Anand Mundra

Small Appliances Volume vs. Value Discrepancy Partial
Value on small appliances, yes, decline is 6%, yes. So it could be lower, for example, if you're selling more higher air fryers or more kettles, that could change the value -- volume proposition completely.

Addressed a key discrepancy in small appliance performance, attributing it to product mix changes rather than competitive pressure or price cuts.

Asked by Nikhat

BIS Implementation on Hobs and Chimneys Direct
So, the BIS thing has been deferred for another 6 months. But once there is a complete restriction in hobs, definitely, we have a better capability to any of the trading brands in the country. We'll definitely have an advantage. ... The country does not have large-scale manufacturing in chimneys. There's a huge opportunity for anybody who's getting into manufacturing.

Provided an update on regulatory changes (BIS deferral for hobs) and outlined the long-term opportunity and challenges in the chimney segment.

Asked by Madhur Rathi

3 min read 8 chapters

Detailed narrative

Q3 FY26 Performance Overview

Stove Kraft reported a challenging Q3 FY26 with consolidated revenue declining 6.4% YoY to INR 378.4 crores, primarily due to lower export sales. Profit after tax also saw a degrowth to INR 4.1 crores, impacted by a one-time expense of INR 4.65 crores. Despite this, the gross margin improved by 188 basis points to 39.4% in Q3, reflecting resilience in its business model.

Domestic Business Strength and Volume Growth

The domestic business contributed 96% of the company's Q3 revenue, demonstrating strong underlying demand. The flagship Pigeon brand recorded a YTD CAGR growth of 9.3%. In Q3, the company achieved robust volume growth of approximately 38% in small appliances and 9% in pressure cookers, with all sales channels remaining active and gaining momentum.

Export Challenges and IKEA Update

Export sales faced significant headwinds in Q3 due to persistent uncertainty surrounding trade negotiations and tariffs between India and the United States, leading to a Q3 degrowth of INR 27 crores. The much-anticipated IKEA business ramp-up has been delayed by three months, with meaningful revenue contribution now expected from Q1 FY27 (April 2026 onwards) due to pending test protocols and approvals.

Operational Efficiency and Debt Reduction

Through disciplined financial alignment, Stove Kraft achieved a meaningful improvement in operational efficiency, reducing working capital days to 43 (from 64 in FY25). This led to a significant reduction in working capital debt, which came down to INR 80.6 crores by the end of Q3. The company aims to bring its normal bank borrowing debt close to zero by the fiscal year-end.

Product Innovation and Distribution Expansion

Stove Kraft successfully launched Pigeon Insta-Mami, an idiyappam/snack maker, which has received high acceptance in southern states. New products like instant water heaters and un-cord dry irons are also being introduced. The company expanded its retail footprint by adding 17 new stores, bringing its network to 313 outlets across 21 states and 138 cities, strengthening its Pan-India presence.

Margin Outlook and Commodity Costs

Management indicated that while commodity markets are volatile, they protect margins through purchase mechanisms for a quarter and will pass on price increases to consumers. They expect gross and EBITDA margins to improve by at least 1% year-on-year, targeting a long-term gross margin of 41-42% within the next three years.

Cooktop Business Re-alignment

The decline in cooktop revenue contribution (from 25-30% in FY22 to 20% currently) was attributed to the company's strategic decision to exit a co-branded channel with oil companies, which previously accounted for 60-70% of its cooktop business. Stove Kraft is now rebuilding its cooktop business through other channels and leveraging its strong backward integrated facility for manufacturing.

BIS Impact on Hobs and Chimneys

The implementation of BIS for hobs has been deferred for another six months, but management expects a competitive advantage once it's in effect due to their superior manufacturing capabilities. For chimneys, while the company is establishing manufacturing facilities, it's a long journey to capture the full market potential of INR 5,000-7,000 crores, with full model manufacturing expected to take about a year.

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