Stove Kraft Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Stove Kraft Ltd (STOVEKRAFT) Q1 FY23 Earnings Concall

Q&A Highlights:

• [00:05:11] Praveen Sahay of Edelweiss Wealth asked about GM if it’s expected to improve from the current level of about 33% to FY21 level. Rajendra Gandhi MD said that if the current trend continues and if prices are soft and input costs continue to decline then it will increase gross margin.

• [00:06:26] Praveen Sahay of Edelweiss Wealth also enquired about the sales channel mix; e-commerce vs. offline contribution in 1Q23 and margins. Rajendra Gandhi MD said that the margins are same across channels. On contribution, e-commerce was at 25%, general trade and modern retail was about 50% and export was 20% and rest is other brands like Gilma and Black + Decker.

• [00:08:12] Vidit Trivedi with ULJK Financial Services asked about the outlook for topline for coming years. Rajiv Mehta CEO replied that demand is back and STOVEKRAFT expects the year to have a good double digit growth, slightly better than the industry average, as a company.

• [00:08:19] Vidit Trivedi with ULJK Financial Services also asked about the reason for uneven employee benefit expenses for FY23. Rajiv Mehta CEO clarified that it should be looked at on an annualized basis as all of the company’s employees are part of it and there are no workers on contract.

• [00:12:41] Aashish Upganlawar with InvesQ enquired about the price related contribution in the 28% growth in 1Q23. Rajiv Mehta CEO answered that of the 28%, 17% is volume and about 13% is because of the price on a YonY basis.

• [00:15:46] Deepak Lalwani of Unifi Capital asked about the export order book numbers. Rajendra Gandhi MD answered that the company executed almost INR50 crore in 1Q23 and continue to have good orders. On pending orders, in 1Q23 STOVEKRAFT has about INR40 crores of pending orders that is being executed.

• [00:21:35] Deepak Lalwani of Unifi Capital enquired about the provisions taken in 1Q23, if it’s largely done with for the large retail account. Balaji AS CFO said that the provision related to the large account is already provided by 31 March, 2022.

• [00:22:49] Harshil Shethia from AUM Funds asked about the demand rampup in the e-com channel. Rajiv Mehta CEO replied that e-com demand is back to normal as it’s the start of the festive season. The company expects 2Q23 to catchup for the shortfalls of 1Q.

• [00:26:06] Saurabh Shah from AUM Fund Advisors asked that will fuller utlizations, what kind of topline is expected from current investments from next year. Rajendra Gandhi MD said it’s a continuous activity, it’s not that the whole plan is over. Also, all the investments done now itself could take the company to INR2,000 crores.

• [00:29:36] Arpit Agarwal from Electrum Capital asked about the reason for rise in other expenses YonY and QonQ. Rajiv Mehta CEO replied that YonY there was lockdown and billing in e-commerce was much higher. Due to this, freight, travel and service cost were lower.

• [00:40:41] Manoj of Carnelian Capital enquired about the broader strategy of store expansion. Rajendra Gandhi MD answered that STOVEKRAFT is a pan India brand only due to the place from where it operates. In the initial phase, the company wants to setup the stores closer to the place where it operates to learn from the experiences. Post that the reachout will be faster across the country.

• [00:42:04] Rahul Ranade with GSM asked that on the company owned and operated stores, what kind of products will be sold. Rajiv Mehta CEO replied that the entire range of Pegion products irrespective of the lower or premium end products will be sold in the stores.

• [00:44:50] Aashish Upganlawar with InvesQ asked about COCO’s targeted topline contribution. Rajendra Gandhi MD answered that the initial insight is that it is quite profitable and on the P&L it will be a positive.

• [00:48:05] Aashish Upganlawar with InvesQ enquired about traction on different channels of exports, domestic distribution, and e-commerce. Rajendra Gandhi MD answered that the company saw very high growth in 1Q in general trade. Little setback was there on the e-com side, while export saw higher growth.