Summary
Stove Kraft Limited - Q3 FY26 Earnings Call Summary Saturday, January 31, 2026 4:00 PM IST
Event Participants
Executives Rajendra Gandhi (Managing Director), Ramakrishna Pendyala (Chief Financial Officer), Hemant Kumar Kothari (Vice President – Investor Relations)
Analysts Anand Mundra, Anubhav Goel, Ashwini Agarwal, Khush Gosrani, Madhur Rathi, Nikhat, Pallavi, Rachna K, Shreyans Jain, Varun Ghia, Vinod Krishna
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹378.4 crores | -6.4% YoY; primarily impacted by lower export sales (-₹27 crores) despite strong domestic momentum. |
| Gross Profit | ₹149.2 crores | -1.7% YoY; decline slower than revenue due to margin expansion. |
| Gross Margin | 39.4% | +188 bps YoY; reflecting strength in business model and disciplined pricing. |
| EBITDA | ₹35.3 crores | -12.9% YoY; 9.3% margin. Impacted by one-time expenses and higher marketing spend. |
| PAT | ₹4.1 crores | -66% YoY; heavily impacted by ₹4.65 crores in one-time extraordinary items. |
| Working Capital Days | 43 days | Reduced from 64 days in FY25; driven by significant operational efficiency. |
| Cash Debt | <₹30 crores | On track to reach zero cash debt by Q4 FY26-end; total debt reduced by ₹80 crores in Q3. |
| Volume Growth | 38% (Small Appliances) | Strong volume growth in small appliances and 9% in pressure cookers. |
Geographic & Segment Commentary
- Domestic Business: Contributed 96% of Q3 revenue. While the quarter was technically down 2% YoY due to the absence of Diwali (which was in Q3 last year), management noted robust demand in January and 10.3% 9M FY26 growth for the Pigeon brand.
- Exports: Significantly impacted, falling to 3.7% of total revenue in Q3 (₹14 crores vs ₹40 crores YoY). Headwinds include U.S. tariff uncertainties and a temporary inventory pile-up at client sites following Q1 delivery delays.
- Exclusive Brand Outlets (EBO): Expanded to 313 outlets across 21 states with 17 new stores added this quarter. The company remains committed to its target of 500 Pigeon stores by 2027 using COCO and COFO models.
Company-Specific & Strategic Commentary
- IKEA Partnership: Production and revenue commencement delayed to Q4 FY26/Q1 FY27 due to laboratory testing protocols in China. Management expects meaningful revenue contribution starting FY27 from this global steady-state business.
- Backward Integration: Maintained competitive advantage in cooktops by processing glass in-house. A new fully automated cast iron line is currently at 40-45% utilization, primarily serving the domestic market.
- Product Innovation: Launched “Pigeon Insta-Mami” (snack maker) with high Southern India acceptance. Introduced “CERACLAD” (ceramic coated stainless steel) and entering the instant water heater and un-cord dry iron segments.
- Debt Reduction: Achieved a ₹242 crore Operating Cash Flow in 9M FY26, used to aggressively pay down working capital loans.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | Double-digit growth | Management expects Q4 to be a strong quarter (target ~₹400cr) to maintain double-digit annual growth. |
| EBITDA Margin | +100 bps annual improvement | Targeting 41-42% Gross Margins over the next 3 years through premiumization and cost control. |
| Debt | Zero Cash Debt by FY26-end | Focusing on eliminating all CC/WCDL bank borrowings by March 31, 2026. |
| Exports | Growth in FY27 | Driven by IKEA scale-up and exploration of non-US markets to mitigate tariff risks. |
Risks & Constraints
| Risk | Context |
|---|---|
| Export Tariffs | US-India trade negotiations have paused new product category launches with American customers. Continued tariff ambiguity remains the primary headwind for the export segment. |
| Commodity Volatility | Rising aluminium and copper prices pose a margin risk. Management intends to pass these costs to consumers with a one-quarter lag. |
| Regulatory (BIS) | While BIS for hobs is deferred to Sept 2026, the transition for chimneys has caused temporary supply gaps as the company stabilizes in-house manufacturing. |
Q&A Highlights
Export Volatility
- Question: Why did exports fall drastically this quarter? (Ashwini Agarwal)
- Answer: Q1 delivery delays shifted orders to Q2, causing inventory pile-up at customer sites in Q3. Additionally, new product categories are on “pause” due to US tariff uncertainty (Rajendra Gandhi).
Small Appliance Discrepancy
- Question: Why is there a 38% volume growth but a 6% value decline in small appliances? (Nikhat)
- Answer: Primarily due to product mix shifting toward lower-value items (like kettles) and price benefits passed on from in-house manufacturing efficiencies (Rajendra Gandhi).
Cash Flow & Debt
- Question: How did you achieve ₹242 crores in OCF for 9 months? (Shreyans Jain)
- Answer: Optimization of net working capital from 64 days to 43 days and disciplined margin management (Rajendra Gandhi/Ramakrishna Pendyala).
Chimney Market Opportunity
- Question: When will you reach the ₹1,000 crore target for chimneys/hobs? (Madhur Rathi)
- Answer: It is a long-term journey. The market is ₹5,000-₹7,000 crores; Stove Kraft’s end-to-end manufacturing provides a significant advantage as BIS norms curb Chinese imports (Rajendra Gandhi).
Key Takeaway
Stove Kraft reported a resilient Q3 FY26 despite a 6.4% YoY revenue decline to ₹378.4 crores, which was largely attributed to a sharp contraction in export volumes (down to 3.7% of mix) and the absence of Diwali sales compared to the previous year. Strategic highlights included a significant improvement in gross margins to 39.4% (+188 bps) and a drastic reduction in working capital days to 43, allowing the company to generate ₹242 crores in 9M operating cash flow and reduce cash debt to below ₹30 crores. While the IKEA partnership and new US product launches faced minor regulatory and tariff delays, management remains confident in achieving double-digit domestic growth and further EBITDA margin expansion of 100 bps annually. Investors should monitor the stabilization of the export segment in FY27 and the successful scale-up of the IKEA business.
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