Stove Kraft

Stove Kraft reported a consolidated revenue of ₹313 crores for Q4 FY25, marking a 3.8% year-on-year decline from ₹325.2 crores in Q4 FY24. Gross profit saw a marginal increase of 0.1% to ₹120.8 crores, with gross margins improving by 150 basis points to 38.6%. EBITDA grew by 18.8% to ₹29.5 crores, with EBITDA margin expanding by 180 basis points to 9.4%. However, Profit Before Tax (PBT) decreased from ₹2.7 crores in Q4 FY24 to ₹1.5 crores in Q4 FY25. The quarter was characterized by subdued demand, elevated inflation, cautious consumer sentiments, and muted discretionary spending, particularly impacting the institutional and microfinance businesses.

For the full fiscal year 2025, Stove Kraft delivered a robust performance with revenues of ₹1,449.8 crores, representing a 6.3% year-on-year growth over FY24. Gross profit increased by 9.6% to ₹552.5 crores, with gross margins expanding by 120 basis points to 38.1%. EBITDA saw a significant growth of 26.8% to ₹150.7 crores, and EBITDA margin improved by 170 basis points to 10.4%. Profit After Tax (PAT) grew by 12.9% to ₹38.5 crores, with PAT margin improving from 2.7%, reflecting the company's strategic focus on improving profitability through disciplined execution and cost optimization.

FY25 was a defining year marked by several strategic initiatives. The company partnered with IKEA to develop and supply cookware products for their global network, with initial revenues expected by end of Q3 FY26 or early Q4 FY26. A state-of-the-art cast iron foundry was commissioned with an initial annualized capacity of 2.2 million pieces, scalable to 4.4 million pieces. New product segments like grooming (BLDC dry air dryer, men's trimmer) and outdoor cooking products are being introduced, with outdoor cooking products manufacturing expected by Q4 FY26 and chimney sales from own plant starting June 2025.

Stove Kraft made a strategic transition from a company-owned, company-operated (COCO) model to a company-owned, franchisee-operated (COFO) model to accelerate retail footprint expansion in a capital-efficient manner. The Pigeon Exclusive brand outlets network grew from 171 stores in FY24 to 262 stores by March 31, 2025, adding 91 stores during the year. The company plans to add another 90-100 stores in FY26, with an endeavor to open around 25 stores every quarter, all under the COFO/FOFO model. The accounting impact of lease rentals resulted in an additional ₹3.5 crores below EBITDA for Q4 FY25 and ₹9.17 crores for FY25.

The company sees significant opportunity in export markets, driven by retailers seeking alternative supply chain partners outside China. Stove Kraft is transitioning from PTFE to ceramic-coated cookware for exports and developing outdoor cooking products for export markets. Exports contributed about 12% to overall revenue in FY25, and management expects this to grow upwards of 50% in FY26, crossing 25% of total revenue in the next three years. The company's manufacturing capacity, which was ₹400 crores, can now support up to ₹2,500 crores of production.

Management is confident in achieving industry-based gross margins, driven by backward integration, manufacturing efficiencies, and potential for strategic price increases. Despite export gross margins being lower than domestic brand margins, the company aims to improve overall gross margins by at least 1% and EBITDA margins by at least 1% in FY26. The retail business, once mature, is expected to achieve EBITDA margins upwards of 12%.

Having completed significant investments in manufacturing facilities (over ₹400 crores in the past 4-5 years), the company's future CAPEX plans are modest. For FY26, the annual CAPEX for retail store expansion and tooling is projected to be not more than ₹25 crores. Including accounting impacts for retail stores, the total outlay will not exceed ₹40 crores annually. Management expects the cost of borrowing to decrease with additional cash flows, indicating a focus on financial efficiency.