Stove Kraft Ltd (NSE: STOVEKRAFT) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
Rajendra Gandhi — Managing Director
Analysts:
Parth Patel — Analyst
Chirag Jain — Analyst
Natasha Jain — Analyst
Pritesh — Analyst
Varun Ghia — Analyst
Khush Gosrani — Analyst
Prateek Poddar — Analyst
Shreyans Jain — Analyst
Unidentified Participant
Puneet Mittal — Analyst
Praful Siddharth — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Stove Kraft Limited Q3 and Nine Months FY ’25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from Orient Capital. Thank you and over to you, sir.
Parth Patel — Analyst
Thank you. Good afternoon, everyone. On behalf of Stove Kraft Limited, I extend a very warm welcome to all participants on this earnings financial results discussion call, today on the call, we have Mr. Rajendra Gandhi, sir, Managing Director; and Mr. Ramakrishna Pendyala, Chief Financial Officer. Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements, which are completely based upon our belief, opinion, expectations as of today. These statements are not a guarantee of our future performance and involve unforeseeable risks and uncertainties. And with this, I would like to hand over the call to Gandhi, sir. Over to you, sir.
Rajendra Gandhi — Managing Director
Thank you, Parth. A very good afternoon, ladies and gentlemen, and thank you very much for attending our Q3 FY ’25 earnings call. A detailed presentation and the press release of our quarterly performance has been uploaded on our website. And I hope everybody had an opportunity to go through them. We are pleased to report a robust performance in this third quarter, reflecting our continued progress and operational improvements. Revenue grew by 11.7% year-on-year, underscoring our consistent growth trajectory. Our profitability saw a remarkable increase of 80%, driven by better operational efficiencies. This robust performance reinforces our belief that our ongoing investments in optimizing operations and strengthening our manufacturing capabilities will continue to deliver positive results in the coming quarters. During the quarter, we had quite a lot of exciting developments, which took place for us. Firstly, we entered into a strategic partnership with IKEA to develop and supply a range of products for the IKEA global network of stores. This will be in the stores and starting from FY ’26. This collaboration aims to leverage manufacturing expertise and IKEA’s extensive retail presence to offer quality kitchen solutions to a broader international market. To support this partnership, we are establishing a dedicated manufacturing facility spanning 1.8 lakh square feet of area at our campus in Canadaka. This facility is expected to enhance production capabilities and align with global best practices in manufacturing and supply-chain processes. This collaboration aligns with strategic objective of expanding its global footprint and strengthening its presence in the international markets. Sharing update about our gas foundry, which we commissioned in November last year is now fully commercialized with an installed capacity of 2.2 million pieces per annum and has been designed to reach 4.4 million pieces per annum in the future. The facility has now started full production of a wide range of cast iron cooked well and high-quality cast iron components, allowing us to now offer a variety of products in order to meet the evolving needs of our consumers. These products are designed to cater to traditional cooking preferences while ensuring durability and health benefits. I’m also excited to share that we have expanded our product portfolio by launching a new line of personal care items, including hair dryers and through e-commerce platforms starting January 2025. This strategic move aims to diversify the company’s offerings and tap into the growing online market for personal care products. By leveraging our established manufacturing capabilities and distribution network, we plan to deliver high-quality innovative person care solutions to our consumers. Also our product, the Pigeon Hairfryer received CFD approval for their, showcasing strength of our in-house manufacturing, which meets high-quality standards. This now allows us to distribute through the extensive network of outlets across India, opening up newer opportunities of presenting our top-notch products to diverse range of consumers. The company continues to grow its presence in Coco and Coco retail models for the Pigeon brand. In this quarter, we opened 17 new stores, bringing our total to 230 stores across 14 states and 63 cities. Our strategic marketing efforts and the launch of Pigeon Brand retail stores are enhancing visibility, while our focus on regional expansion is set to drive long-term growth for the brands across India. Channel mix for Q3 was 39% from general trade, 34% from e-commerce, 10% from modern trade, 3% from corporate sales, 6% from retail and 8% from our exports. E-commerce and general trade continued to show high-growth with retail channel also growing significantly. The expansion of our product range both within existing categories and into new ones present a dynamic journey for the company, offering ample opportunities for growth across multiple sectors through a diversified channel mix. Now I will discuss the Q3 FY ’25 financial performance. The consolidated revenue stood at INR404.1 crore for the quarter versus INR361.6 crore in the previous quarter last year, hence registering a growth of 11.7% on year-on-year basis. Gross profit for the quarter stood at INR51.7 crores versus INR139.2 crores in Q3 FY ’24, registering a growth of 9% year-on-year. Gross margins for the current quarter stood at 37.6%, showing stability over the last few quarters. EBITDA for Q3 FY ’25 stood at INR40.5 crores versus INR30.1 crore in Q3 FY ’24, showing a growth of 34.7% year-on-year. The EBITDA margin for the current quarter stood at 10% versus 8.3 in Q3 FY ’24, improving 170 basis-points year-on-year. Profit-after-tax for Q3 FY ’25 stood at and INR12.1 crores versus INR6.8 crores in Q3 FY ’24, registering a growth of 79.7% year-on-year. The PAT margin for the current quarter stood at 3% versus 1.9% in Q3 FY ’24, improving by 110 basis-points year-on-year. This is post the notional impact of indirect lease accounting of INR2.09 crores. Now I will discuss the Nine-Month FY ’25 financial performance. The consolidated revenue stood at INR1,136.8 crores for nine months FY ’25 versus INR1,039.1 crore in nine months FY ’24, hence registering a growth of 9.4% on year-on-year basis. Gross profit for nine months FY ’25 stood at INR431.7 crores versus INR383.3 crores last year same-period, registering a growth of 12.6% year-on-year. Gross profit margin stood at 38.1% at an increase of 110 basis-points year-on-year. EBITDA for nine months FY ’25 stood at INR121.2 crores versus INR94 crores in nine months FY ’24, showing a growth of 28.9% year-on-year. EBITDA margin for nine months FY ’25 stood at 10.7% versus 9% in nine months FY ’25 — FY ’24. Profit-after-tax for nine months FY ’25 stood at INR37 crores versus INR31.5 crores in nine months FY ’24, showing a growth of 17.7% year-on-year. PAT margin for the period improved from 3% to 3.3% with substantial efforts underway to improve the same even further. Now I would request the moderator to open the floor for question-and-answers. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] We have our first question from the line of Chirag Jain from Emkay Global. Please go ahead.
Chirag Jain
Thank you for the opportunity. Good evening, Rajendra ji. I think we have delivered a fairly healthy performance in an otherwise subdued consumer sentiments and a decline reported by a listed peer, a larger listed peer. Sir, how do we see growth going ahead. I believe festive season was very strong. Have you seen the consumer sentiments weakening post festive or how are, let’s say, the broader consumer sentiments? Is it like improving, stable? And probably going ahead, how do we see, let’s say, the growth shaping up? Obviously, we are taking lot of initiatives. So if you can share some thoughts around that.
Rajendra Gandhi
For us the first and the last quarter are relatively softer than the second and third quarter. But consumer segment sentiments, of course we — I don’t say they are very strong, but we are also driving our sales-through special offers during this period. This is a normal for us every — every year in this quarter that we have consumer offers. So we are seeing continued — continuous growth.
Chirag Jain
Okay. Okay. So broadly, I think earlier you were indicating or usually you have been indicating 8% to 10% revenue outperformance compared to the industry trends, that by and large the guidance remains in terms of growth outlook.
Rajendra Gandhi
So we will definitely grow faster than the industry. And as and when the demand again gets back to the normal demand, we we’ll definitely grow better than what we are growing now. Otherwise, we believe that we’ll be able to grow better than industry.
Chirag Jain
Okay. And just on the IKEA tie-up, by when do we see, let’s say, this business coming into our, let’s say, numbers, P&L and how big, let’s say, could be the opportunity based on the capacity that you are setting up in the current phase?
Rajendra Gandhi
This business goes through a very methodical kind of arrangement. So the initial business will only start between the third and the fourth quarter of this coming financial year, that is post October ’26, FY ’26. And then it is a continuous process where we keep on developing products. So the first range of products will start rolling out from the factory in October, November this year. But — and as we progress, there are going to be newer and more product range. The capacity, of course, the size of the factory itself is quite large. We have 1.8 lakh square feet dedicated exclusively for this arrangement. And there is a large scope. It will be unfair to quantify in absolute value, but it is a — it is a very good arrangement in terms of both in and the growth potential for the company, but in also in the learning potential where they bring in from their side global best practices in manufacturing, manufacturing excellence, supply-chain and I mean, digitizing the whole supply-chain. So all these learnings are there. It also enhances the product offering for our domestic brands that we do, yes.
Chirag Jain
Okay. Just last thing from my end and then I’ll fall-back in the queue. How much is the capex that we are committing for the ICA business?
Rajendra Gandhi
So the building is already there, we have already built. Additionally, we will be investing INR15 crores overall over the next, say, one year.
Chirag Jain
Okay. So it won’t be very large in terms of the overall capex requirement.
Rajendra Gandhi
No, this is an ongoing business for us. It is only that we have exclusive facility for IKEA, so that it matches to their expectations and there are some automation levels and that will that we will be doing. So in my opinion, it will be in the range of INR15 crores to INR20 crores.
Chirag Jain
Okay. Thank you. Thank you so much. All the best.
Operator
Thank you. We have our next question from the line of Natasha Jain from PhillipCapital. Please go-ahead.
Natasha Jain
Yeah. Thank you for the opportunity. Sir, my first question is on the top-line. So you had mentioned that you would grow at a CAGR of almost 15% or whatever you’ve grown at the last three years. If I see that number, you fall short in terms of your top-line. Now fourth quarter being a softer and a leaner quarter, is there any change in top-line guidance? Are we expecting a slight miss this year?
Rajendra Gandhi
Yeah, we would ideally want to grow at the historical growth rate. I can say that there is a relatively shortfall in the growth, definitely. But relative to the quarter that we have seen last year for the fourth quarter, we believe we are in-line with the same growth. It is not in-line with our historic growth rates. We realize this. There has been a little softness in the demand, but with the new initiatives, new products, we believe that we’ll get back to that growth.
Natasha Jain
Sir, you mentioned that you will be in-line to grow at what you had grown in the last quarter, last year fourth quarter.
Rajendra Gandhi
Last — no, historically, we have been — if you take-away the last year, we have been growing at 19% CAGR. Our endeavor is to get there.
Natasha Jain
Okay. All right. And sir, how does fourth quarter look like to you at least in terms of the start?
Rajendra Gandhi
As I mentioned, we are seeing growth.
Natasha Jain
Okay. And sir, now if I even see your margins at a gross level, there has been a margin decline. Can you just allude as to what the reason would be for this?
Rajendra Gandhi
No, particularly the month of December, Jan, we have customer offers and so there is a small decline in the gross margins. But overall for the year we believe that we will continue to be at the level that we aspect for this year and we are taking initiatives to improve our margin from here.
Natasha Jain
Got it. And sir, one last question before I fall-back in the queue. You have — you have alluded for quite some time that at an EBITDA level, you will land at 11% margin in FY ’25. Now you’ve landed at 10.7 on a nine-month basis. That means in-quarter four, you’ll have to deliver beyond 12% to get where we want to. Are we on-track in terms of that number or even there, there is a slight chance of a miss.
Rajendra Gandhi
Yeah, they we believe, of course, our endeavor was to be deliver a minimum of 11%, but be in that range. It will not be way out.
Natasha Jain
All right, thank you so much. I’ll get back-in the queue.
Operator
Thank you. We have our next question from the line of Pritesh from Lucky Securities. Please go-ahead.
Pritesh
This IKEA partnership, if you could tell us what is the scale-up possible with EKEA and you are one, when will you start your supplied?
Rajendra Gandhi
The business invoicing will start in October, November of the coming financial year. And to tell you the program that we’ve initiated annualized even if we talk about the whole year is for about 2.5 billion to INR3 billion, close to 3 million pieces annually. And if you — the current program, if it is for an annualized basis, it’s not that this year we recognize this, it will be in the range of about INR150 crores. But this is not the only program that the arrangement is. This is to start with, this is one range of products that we are starting.
Pritesh
So just to clarify, 3 million pieces is INR150 crore or INR150 crore is your one-off supply.
Rajendra Gandhi
This one 3 million — the current range at 3 million pieces is about INR150 crores and this is not the only line that we are doing with them. This is already finalized, that is the range — the supply for this range of products, the designs and everything and schedule is all finalized. But there are also several other products that we are discussing.
Pritesh
Sir, if you start next year, let’s say, quarter three of next year, will the following year, which is FY ’27, will you be ramping-up to the full of that program or it will take more time than that?
Rajendra Gandhi
No, no, you’re right. If you say one year from the time when we start, the second year will be full. So if you tell 12 months for this product range, 12 months from next year, November, December, we’ll have this full — full volume of 3 million.
Pritesh
And the facility now that you’ve created the total facility for the company, what revenues it can support?
Rajendra Gandhi
You are talking about Stove Kraft as a whole?
Pritesh
Yeah, Stove Kraft as a whole.
Rajendra Gandhi
We will be able to with the current capacities that we have and with small tweaking, we can double the revenue.
Pritesh
Double the revenue.
Rajendra Gandhi
Yeah.
Pritesh
So, which means we were at about INR1,40 crore INR1,500 crores, we can actually do INR3,000 crores from this same setup.
Rajendra Gandhi
With some — maybe there will be some maintenance capex, I don’t want to achieve you like that, but without the large new expansion, definitely we can give this.
Pritesh
Okay. And if I look at the OpEx line with that doubling of revenue, what operating expenses should move higher with that in the opex line?
Rajendra Gandhi
So with the more automation we are doing now, see, there will definitely be increment in people cost and as we produce more, there’ll, there’ll be some increase in power cost and because if we will transport more of that goods, definitely there will be not in terms of percentage, but in terms of absolute value, all this I’m telling you in absolute value, there will be increase in freight costs. In terms of percentage, I think there is a scope for improving from where we are now.
Pritesh
Okay. Okay, sir. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Varun from Equitree Capital. Please go-ahead.
Varun Ghia
Hi, sir. A couple of questions. Firstly, you mentioned that you have given some discounts during this quarter. So will this continue going-forward or can we look — can we see the margins coming back to 38% gross margins in the upcoming quarter?
Rajendra Gandhi
Another business is designed for 38% or to develop for the year. Every year during this period, during the month of December, January, we give consumer offers every year, this is in-line with our business plan. And so we are in-line with our margin expectations on the gross margin. There is no dip on the gross margin. But for this period that is particularly December, January, we give some special discounts to our customers. And so there is generally a 1% variation. But overall, when you see for the whole year, it they are in-line with the margin.
Varun Ghia
Okay. And secondly, how much growth can we see in the small appliances and what — how much will it contribute to the overall mix?
Rajendra Gandhi
Yeah, our small appliance is growing faster than the overall other categories are put together. So currently, if you see for the — we have been witnessing continuous growth there. Of all the categories, our small appliance has grown the highest. We can — it is at about 25.6% is the growth. And if you will only see the contribution alone for the quarter three, 45% is coming from small appliances. And if you will see for nine months, the period, we are at 39.9%, say 40% contribution coming from small appliances versus if you will see the same time last year for nine months, we were at 34.6%. So continuously we are seeing growth in our small appliances category.
Varun Ghia
What are the gross margin level in — is it lower than small appliances?
Rajendra Gandhi
As far as all these under the PGM brand channel or product, we are agnostic on product category or so the margins are the same.
Varun Ghia
Okay. And how do you see the overall demand outlook given the tax cuts in the budget and how does the company prepare for the same?
Rajendra Gandhi
We believe it should be positive for us with if there is more money in the hands of the particular PG, if it’s the middle-class, the emerging class, definitely the — we believe it is a positive for our business. People will be able to buy more of our products. That’s what we believe.
Varun Ghia
One question I have was what is different that is doing compared to the competitors apart from the pricing that is helping it increase the overall volumes.
Rajendra Gandhi
One is we are able to manufacture these products. This will all go through supply-chain disruption if people are there depending on non-manufacturing. Today, the PIS — the compulsion from BIS is also making it mandatory for people to produce in the country. It’s not only limited to that, overall, our manufacturing facilities and our expansion on our distribution channels, both is giving us that advantage. We are increasing our retail stores that is giving us some positive. Our exports, we are in the peer group, we are the largest exporter and our export is actually growing. While we are — there is a correction in our export, temporarily there is a change from earlier all the exports that we are doing linked to only non-stick that is PTFE coating. Now globally, there is a shift from PTFE to ceramic coating. I’m not very sure whether you understand the technicality of this. So we have corrected all that. And so you will also see again our exports growing faster than what it was and that category is also contributing. In my opinion, these are the three reasons why we will want — we will grow better than the industry because we are able to produce these products ourselves. We are able to make high-quality products and give it to the consumer at a very — I mean for the consumer is very attractive. And also we are able to do this along with expanding our channels.
Varun Ghia
Understood. And one last question I missed on the overall potential revenue from the tie-up, which you mentioned in FY ’27.
Rajendra Gandhi
I can say our overall exports per se will — in the next three to four years be 20 — from a current 12% will be 25% of our business.
Varun Ghia
Okay. Got it. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Khush Gosrani from InCred Asset Management. Please go-ahead.
Khush Gosrani
Yeah. Hi, thank you for the opportunity. Sir, I missed your opening remarks. So just wanted to understand our retail expansion plan. This quarter, we have added only 17 stores and we were supposed to reach 270. So any revision in that guidance and for next year as well as…
Rajendra Gandhi
We continue to open between 25 to 30 stores every quarter. In this quarter, we have also done some corrections. So wherever the — we believe that we need to relocate, we would have also done that correction. And also we are now focused on building more of FOCO and stores. We have tapped the number of stores. So we are in-line. Maybe if we don’t reach a 270, we may be at around, say, between 250 and 260. So the next — this number that you see is net of those corrections.
Khush Gosrani
So how many stores we would have corrected, relocated or closed.
Rajendra Gandhi
In the overall historically as of today, about 14 stores we have relocated. For us, we will watch for a store to at least be at breakeven and it does not happen between six to nine months of the opening, we will start looking at relocating.
Khush Gosrani
And for next year, we will add same number of stores, 20 to 30 stores per quarter.
Rajendra Gandhi
We will continue to open between 25 to 30 stores every quarter.
Khush Gosrani
Okay. So then your depreciation interest would increase because of lease liability, right?
Rajendra Gandhi
Yeah. So we are probably — we are aware of this. We are also working on improving our margins.
Khush Gosrani
Got it, sir. And sir, in terms of exports, we were looking — we had added Walmart, right? So how is the R ramp-up happening?
Rajendra Gandhi
Like I mentioned, there is a correction from the current pure, nonstick to additional range of products. Our business with Walmart is also in the coming quarters is growing. We have good orders from Walmart.
Khush Gosrani
Got it. And these — both the IQ opportunity and the Walmart would be at similar margins or better margins than currently that we do at gross level.
Rajendra Gandhi
I think more or less the export margins are in similar levels and it is in-line with our EBITDA.
Khush Gosrani
Sure. And going-forward, say we should able to for — even for next year or next two years, we should able to do 11% plus margins that would be reasonable assumption?
Rajendra Gandhi
Yes, yes. This luxury, okay, we will work towards bettering from 11, while that is a — our business is designed to deliver minimum 11% now.
Khush Gosrani
Got it, sir. And sir, last question, since December and Jan, you had to provide higher discounts. This is still a continuing trend or you feel that this should stop now?
Rajendra Gandhi
Every year during this period, the company, the distributor, the dealer, everybody comes forward to contribute to this special offer that we have. The last 10 years from 2013, we have been doing this. So some portion of our GT business will be at a little lower-margin than the normal during the whole year. So this the — overall, the difference is very small. But when you see YTD, our margins will be closer to 38%.
Khush Gosrani
Okay, sir. Thank you. I’ll get back-in the queue. Thank you.
Operator
Thank you. We have our next question from the line of Prateek Poddar from Bandhan AMC. Please go-ahead.
Prateek Poddar
Yeah. Hi, sir. Sir, two, three questions. One is just on capex, right? I heard you talked about INR3,000 crores of revenue from current capacity. So from a capex perspective, fair to assume that the requirements will be quite muted and only maintenance capex for the next couple of years till the time you reach, let’s say, eight years. Okay. The second, sir, just on working capital, if you can help us, how is the working capital being trending? I remember you talked about controlling that and being almost negative or being flattish, close to zero, I mean in terms of…
Rajendra Gandhi
So we have improved our net working capital days. The way we calculate of course to — we were at 77 days in FY ’22. We were at 62 days in FY ’23. We were at 59 days in FY ’24. For the quarter-ending FY ’25, we are at 45. We are very confident to improve from here.
Prateek Poddar
Okay. Fantastic, fantastic. And just quickly, you know, just on a Y-o-Y basis also, we have seen some gross profit compression, but and last year also you said we do give discounts. So what is really, you know, impacting our gross margins.
Rajendra Gandhi
So YTD FY ’24, we were at 36.88% and YTD FY ’25, we are at 37.97%. We have seen an improvement of about little more than 1%.
Prateek Poddar
Sure. I was asking for the quarter, sir, but okay, it’s fair, fair.
Rajendra Gandhi
Yeah. For the quarter Y-o-Y…
Prateek Poddar
Is there an of something or something which been…
Rajendra Gandhi
Yeah, this year maybe actually our sales were — means, but see for this quarter, if you see versus the previous quarter, not the Y-o-Y, it is a larger quarter. This is a smaller quarter versus the Q2. So the contribution of this discounted sales is a little higher than normally what it was last year. So you will see a little. But when you see annualized for the year, you will get a number which is closer to 38 bps.
Prateek Poddar
Got it. And what would be your full-cost of rent in the sense a lot of the rent goes into depreciation and finance. Can you call that out? Is it possible? How much would be the cash cost of rent?
Rajendra Gandhi
So — but I can tell you what it is, average of rent is INR60,000 into the number of stores. I’ll just tell you what it is, it’s INR3,3 per month or growth 39 lakhs. INR4.4 crores per quarter.
Prateek Poddar
For the first-quarter, right?
Rajendra Gandhi
Yeah.
Prateek Poddar
Okay, fantastic, fantastic. And just from an IKEA perspective, you said there are several products under pipeline. How big can this account be for you in the next three to five years or let’s say, next three years? I think you’ve talked about exports being 25% of your sales. So just from an IKEA perspective, how big can this account be, sir, for us?
Rajendra Gandhi
So of that IKEA can be as big as 50% of our export sales.
Prateek Poddar
Got it. And this is assuming — I mean, look, yesterday, there were tariffs, et on China, which would mean that we become even more attractive from a sourcing perspective. Is that a fair understanding?
Rajendra Gandhi
It’s not this new — this new development is not linked to current situation geopolitical, but this is an — I mean, I think this process has started more than a year back. If there is something very — I mean if lot of it is moving to India, we don’t know, there can be an acceleration of this process. But currently with the plans that we have, we have a good pipeline of orders for export. We also have some new customers who want to work with us and I, in our opinion, we’ll also start working with them very soon.
Prateek Poddar
Got it. And lastly, from a new product development, any new products you talked about, etc which we’ve launched on the e-com platform. Any new products you are looking for or do you want to scale that up?
Rajendra Gandhi
Yeah, these are — and the grooming products are new. We have just launch it on the e-com platform and gradually we’ll bring it to the modern retail. If there is enough traction and if there is a good demand, we will start manufacturing things. If we start manufacturing, definitely we’ll get to leadership in that category.
Prateek Poddar
So as of now, you’re trading in these products, is it?
Rajendra Gandhi
Yeah, yeah, that is the process that we follow.
Prateek Poddar
Okay, fantastic, sir. Thanks.
Operator
Thank you. We have our next question from the line of Shreyans Jain from Swan Investments. Please go-ahead.
Shreyans Jain
Hello, can you hear me?
Rajendra Gandhi
Yes, sir. Please go-ahead.
Shreyans Jain
Sir, my first question is again on the gross margins. So last year also, sir, in Q3, you would have had the same festive and the additional customer offers that you would have run, but last year we had seen some kind of gross margin improvement and this year Q-o-Q, we’ve seen some kind of compression. So I’m really not able to understand what is happening.
Rajendra Gandhi
Okay. Let me explain to you. See, last year, we had the bigger sales of Diwali in the Q2, this year we had, I mean, Q3, sorry and this year we had more in Q2 and the contribution of this discounted sales has been a little more than the festive sales. There is a — in the quarter, we have festive sales, we had discounted sales at the back-end of the quarter. So the contribution of this discounted sales little higher and that’s why you are seeing that, but that will all get corrected when you annualize it?
Shreyans Jain
Okay. Okay. Sir, my second question is on the IKEA front. So you’re saying we supply 3 million pieces worth INR150 crores. That is which product category sir?
Rajendra Gandhi
It’s cookwear, it’s a combination of and aluminum and it’s all to do in one-way with cookwear.
Shreyans Jain
Okay. And over — gradually over the next three to five years, we can supply all of our product categories to them or it’s just restricted to cookwear?
Rajendra Gandhi
Okay. No, no, the current arrangement and the capability that we are building is only for cookwear. Today, all our exports are only cookwear.
Shreyans Jain
Okay, okay. So sir, is there an opportunity for you to cater to other product categories because IKEA I think would be selling all products, right?
Rajendra Gandhi
That is possible for across the export business. But today, all the focus and arrangement that is there is to build the cookwear category.
Shreyans Jain
Okay. Sir, my next question is on your retail business. So from what I understand, historically, we’ve been saying that we won’t be doing cocoa and we would be doing four. But if in this quarter, I’m just looking at it, we’ve opened 17 stores out of which 15 are on a Coco basis.
Rajendra Gandhi
So, see like this, when we open new stores, it’s not that the new stores are going into or Q4, we will equally have Co4 or stores for the number of stores that we have — we will be opening, yeah, there is a two-store difference between the number of — so between the quarters that would have happened and that we have two more stores than what we have moved from our existing stores to Co-4 and so for. But we as a business, the retail business, we are — our endeavor is that we will cap the number of stores to be 171 for all times. It will not increase beyond that. All the incremental stores will be either or four.
Shreyans Jain
So sir, when you’re saying you opened 15 Coco stores this quarter, so in the base number of to 17 whatever stores that were there, so out of that 15 were converted to four, is it? And then you put up.
Rajendra Gandhi
You’re right. You’re right, sir.
Shreyans Jain
Okay, okay. So sir, then with this logic, our interest in depreciation going-forward, you mentioned earlier in the call should increase. So then sir, technically it shouldn’t increase, no. I mean either no — other than the rental increase in rental rates, other than that there should be…
Rajendra Gandhi
No. Only if we do have 44 store, then it is not on the books of the company, which we don’t intend to. All the stores, the lease arrangement is with the company. The store technically belongs to the company, but there is no cash outgo because this is funded by the deposit that the franchisee pays us both for inventory and the fit-outs and including the deposities. But the lease agreement, the lease arrangement is with the company and not with the franchisee.
Shreyans Jain
Okay. So sir, this INR100 crores annual run-rate should more or less be at this level only.
Rajendra Gandhi
Yeah, I think it will be at the level, sir.
Shreyans Jain
Okay. And sir, just one last question. In terms of new product developments, you were talking, we will continuously evaluate that thing. So just wanted some sense, when you’re doing such new product development, these are all part of small appliances, right? And small appliances now is about 46-odd percent of our business. So how comfortable are you with this number or — I mean, do you see this number will be capped at 50%. So how do you look at this whole piece, sir?
Rajendra Gandhi
No, we are not worried about capping this — and that too, I’ll tell you for us in the small appliances business, we don’t consider — consider the index induction cooktop business as part of our small appliances. Though it falls for generally, it is considered as a small appliance for any other peer group. For us, we classify the induction cooktop under the cooktop business. So we are not worried about which category of products, but we only are wanted to highlight that our appliances business is growing faster than the other product categories that we are already-strong at.
Shreyans Jain
Sir, in small appliances, in-spite of me doing a lot of consumer offers this quarter, the growth rate in SBA seems to be let’s say, volume growth of 12%. Isn’t that a tide bit lower?
Rajendra Gandhi
So I can — compared to the industry, we have grown at that rate meaning both in volume and value.
Shreyans Jain
Sure. And sir, last question, on a nine month basis, if you have to look at your induction cooktops as a category, nine months volume growth has been 10%, but overall value growth is minus 3%. So what is really happening in this category, sir?
Rajendra Gandhi
The — there are two things that go into the manufacture of the index. One is the glass. The glass is — has a lithium element in the glass. There was a disruption in the cost of lithium and so there was a huge spike in the cost of the glass in the preceding year. And also there are lot of electronics that go into the manufacture of this induction top. So both these costs have corrected, not in the last quarter, in the last eight to 10 months or the costs have drastically corrected. We as a company generally work on a cost-plus model and passed on that. And so we are seeing good growth in volume, but because of the ASP coming down, the value you are seeing a little drop-in the value.
Shreyans Jain
Okay. And sir, last question, sir, nine months volumes have been flat. So how do you look at this whole category…
Rajendra Gandhi
No. So — see cookwear is also — our exports is all about footwear. I told you about the correction that is happening in the category. The PTFE coated footwear is slowly going down and it’s getting replaced by the new range of footwear that we have developed. So we are going to that phase-in this current quarter. This will all come back. We have good orders for the footwear and we have corrected that the product category in the sense, we are doing a lot of to — ceramic cookwear.
Shreyans Jain
Okay, okay. Thank you and all the best to you. Sorry?
Rajendra Gandhi
There is a transition happening from PTFE to ceramic.
Shreyans Jain
Okay. Okay. Thank you, sir and all the best.
Operator
Thank you. We have our next question from the line of Mustafa Kerwala from Cube Investments. Please go ahead.
Unidentified Participant
Good evening, sir, and thank you for the opportunity. Sir, can you please repeat what is the online contribution for us.
Rajendra Gandhi
For the quarter or for the overall…
Unidentified Participant
For quarter and by nine months sir.
Rajendra Gandhi
Just a minute 34 — YTD is 34.7 for the year, YTD is at about 34.7% online.
Unidentified Participant
And sir, for the quarter.
Rajendra Gandhi
Quarter it is in approximately the same, 34.3%.
Unidentified Participant
Okay. And sir, since we are selling more this new category of grooming products online-only, going-forward in the future, sir, do you expect our online contribution to be in this range or it will become even higher?
Rajendra Gandhi
I think it will be in the range. So if you see our GT this quarter it was at about 39.3% and for the YDT, it was 32.8%. So for us, I think between the GT and these two should be around between 65% and 70%.
Unidentified Participant
And sir, I’m guessing, sir, the margins might be a tad little bit lower in online, sir.
Rajendra Gandhi
No. Let me assure you for us all the channels and the products, the margin is agnostic. We are — for the margins are the same for us for us. We work on the concept of MRC, minimum realization cost to the company and we don’t breach those numbers, whether we are selling on e-com, modern retail or general trade. Of course, for exports, our margins are lower, but then at EBITDA, they are at the same level. And on retail, the margins are higher, but there are costs in the retail.
Unidentified Participant
Fair enough, sir. So sir, our IKEA contract manufacturing will probably mirror the margins of our export business or our online and GP business, sir?
Rajendra Gandhi
It is an export business. The business itself is export.
Unidentified Participant
Okay. So sir, margins will be a tide bit lower there. Okay. Sir, in the small appliances…
Rajendra Gandhi
See, the market will be lower and EBITDA it will be at the at the similar levels of the company’s margin. There are no other costs in-between.
Unidentified Participant
Fair enough, sir. Sir, in the small appliances segment, although volume growth has been 12.2% for the quarter, the growth in value has been 31.6%, sir. So can you just shed some lights around this particular product difference?
Rajendra Gandhi
Is the product mix because if IAE value see volume is for overall as a category, we calculate the volume. And if you have — sorry, I’ll also tell you on small appliances, what is happening. Particularly starting with the last quarter, one of our new SKUs, I mean range of products that is the OTG, it — we have started manufacturing this and that has started contributing significantly and it is growing very fast. I’ll give you some number on the OTC. We used to sell about 10,000 to 15,000 units per year. And in the last quarter, we have already started selling 40,000 units per month. So because it is a high-value — I mean, high ASP product, so you will see higher-growth in value than in the number. The number of units will be not very-high, but the value is high.
Unidentified Participant
Okay. And sir, similarly in the cooker segment, sir, what the contribution — the growth has come from some of the premium cookers or the lower-value item cookers?
Rajendra Gandhi
So there is a movement from aluminum to stainless steel. And as we — while we want to grow both in volume and value, our value growth in the future in cooker will be larger than the volume growth because there is a shift from pure aluminum pressure cookers to value-added pressure cookers like pure steel or like pressure cookers, which are — which the ASP of these pressure cookers is higher than the aluminum.
Unidentified Participant
Okay, fair enough. So basically — got it. And sir, lastly, sir, we have set-up such a large capacity for and, sir. So are we — I mean, enameled cookware is the company looking at launching anytime in the future because that is a progression only of…
Rajendra Gandhi
That is a natural progression. Today, our plant is fully operational. We are — we are having both opportunities in export and our domestic market is also accepted this product very well. Currently, we are doing seasoned and, but definitely this is a national progression. In the next two, 3/4, we’ll have an enamling line that will also include us –.
Unidentified Participant
Sir, how much extra capex would we have to require to set-up this enamel? Last question, sir. After this, I’ll get back in the queue.
Rajendra Gandhi
We already have the ovans in — so even for seasoning line, you require the ovens in and these are at only different temperatures, there be some additional booth. Of course, this is not very significant for the facility that we have. It is a very small cost. It will be maybe one — between INR1 and INR2 crores.
Unidentified Participant
Wonderful. Thank you so much, sir.
Operator
Thank you. We have our next question from the line of Puneet Mittal from Fort Capital Limited. Please go ahead.
Puneet Mittal
Hi, just two questions. One is, you mentioned that for all the stores, the leases with the company. In that case, what’s the difference between the COFO model and the FOFO model?
Rajendra Gandhi
Okay, see when we say the lease only the lease agreement is with the company, the rent is paid by the franchisee and that gets adjusted in the commission that we pay to them. Example, when it is on the COCO model, we infer the cost, we pay the people cost, the rent of the store is paid by the company, whereas in the franchisee model, the rent is paid by the franchisee and the people cost is paid by the franchisee, but we share a margin within — and because the landlords would want to and the company would want to have a control on the stores, we collect this rent and deduct it from the commission that we are supposed to pay to the franchisee and pay it to the landlord and accounting standards because the agreement for this lease is with the company that has to be accounted the way it is done now?
Puneet Mittal
Okay. Okay, got it. The second question related to the same thing. You have listed that your average per revenue per store per month is about INR3.56 lakh. Can you give more color on in terms of what’s the revenue for vintage stores versus new stores that has been open? And what is the maximum potential for a store to do in terms of revenue?
Rajendra Gandhi
So for us, the breakeven is at 2.5 lakhs. And if you don’t see any store doing that between six to nine months, we will relocate them. So we don’t have today any store which is doing anything below 2.5 lakhs. But for any new-store that we have started and still it is going through that journey. Any store which does not perform to that breakeven level between six to nine months, we start relocating.
Puneet Mittal
Okay. What is your target to — what is the target number of stores that you’re looking for, for example, three years down the line?
Rajendra Gandhi
So we will be able to open between 80 to 100 stores every year.
Puneet Mittal
And sorry, one more final question. And can you give us some break on the geographical spread of these stores?
Rajendra Gandhi
Currently, we are in-stores out across Karnataka, Kerala. And in the north, we are there in UP, J&K, Punjab, Delhi, NCR region we have also started our stores in Gujarat.
Puneet Mittal
So we are spreading across the country now from more…
Rajendra Gandhi
Next three years, we’ll be there across every region of the country.
Puneet Mittal
Thank you so much. Thank you.
Operator
Thank you. Next question is from the line of Prafal from Shrawas Capital. Please go ahead.
Praful Siddharth
Hi, sir. Congrats on good set of numbers. I just wanted to check what would be our gross margins on the export sales.
Rajendra Gandhi
Around — between 27% to 30%.
Praful Siddharth
Okay. So the INR150 crores deal with IKEA, so our gross margins would be somewhere between 27% to 30, would it be the same or would it be closer to 38%, 40%?
Rajendra Gandhi
Yeah, the margins for export business will be in that range.
Praful Siddharth
Thank you.
Operator
Thank you. Next question is from the line of Anand Mundra, Individual Investor. Please go ahead.
Unidentified Participant
Yeah. Hello, sir, good evening. Congratulations on good results, sir. Sir, wanted to clarify how much revenue from — from IKEA will come in this year if we start in September, October of — in FY ’26, I mean.
Rajendra Gandhi
It should be in the range of INR30 crores. That is 1/4, we’ll have 1/4.
Unidentified Participant
Okay. And from FY ’27, we can assume INR150 odd crores, right, sir?
Rajendra Gandhi
No. The — for the whole year, yeah, would be in the range.
Unidentified Participant
Yeah. So that would be an extra 5% odd growth over and above your regular growth because of IKEA being a new customer which you have added. Can we assume that, sir?
Rajendra Gandhi
Yeah. So our overall export business will continue to grow at a faster rate than what we are growing as a company for the next few years because it’s not only limited to IKEA, we also have good business plans that we have with our existing export customers, but there are also new customers whom we are talking to and which can also fructify in the next two, three quarters.
Unidentified Participant
Okay. And sir, this, you mentioned that this — you are talking about only one-product and there can be other products, you can also start with them over the next…
Rajendra Gandhi
They are already discussing. So for the — from the time we start discussing a product to actual production and supply, it is nine to 12 months. So apart from the range that is finalized and for which we are working and where we believe we’ll be able to start delivering these products from October, November this year, there is another range of products that we have already started discussing.
Unidentified Participant
Okay. And potential of that product can be also similar to this product, sir?
Rajendra Gandhi
Normally the volumes of are very large because they will manufacture one-product from one factory only and they have about 550 stores across the globe. Any product that they produce is all very large in number. By value, yeah, it may not be exactly this because this the line that we are currently doing is 11 SKUs. The product category that we are talking now is about four SKUs, but the volume is almost equal to the level that the current range is, but the current range is at a little premium. So it may not be exactly the same, but maybe in the range of, say, 50% 60% of the expenses.
Unidentified Participant
Okay. And sir, the other customer, Walmart, is there any scope for increasing product lines over there also.
Rajendra Gandhi
Yeah, yeah, we have already replaced some of our PTFE range of products with a very premium range of products. They are also very keen for our and range of products. We are also — while we have not disclosed this, since you asked me about — this is for general consumption. We are setting up a line for bakeware. This will be both for Walmart, the other retailers and also this may have interest from IPI.
Unidentified Participant
Okay. And this is expected to-be-built from next year, sir for Walmart?
Rajendra Gandhi
No, this — that financial year, yes.
Unidentified Participant
Yeah. Okay, understood. Sir, another thing, sir, there are multiple photos circulating on Whatsapp saying that there was some sales to state government or local politician in the first-nine of — in-quarter two of this financial year. Can you quantify, was there any free distribution by any government — state government or local politician and we have got some sales from that.
Rajendra Gandhi
Can you please…
Unidentified Participant
So I got a photo of induction saying that it’s made by cropped and it’s actually — so I was just wondering whether we have participated in any government contract in this financial year, sir.
Rajendra Gandhi
There are two things. We don’t do any government contract as a policy. And we also in the past have given products to some politicians in the past. As a policy, we don’t directly deal with any political parties. And we are not aware how through any channel, any of these products will end-up with any of these free distribution. But we don’t have any large single order from any of our channels for the index cook top that you are mentioning.
Unidentified Participant
Okay, sir. And sir, how much is capex for next year’s guidance, maintenance capex?
Rajendra Gandhi
We can safely take it between INR25 crore and INR35 crores. In our opinion, we may not require that much.
Unidentified Participant
That includes the capex for IKS…
Rajendra Gandhi
Retail stores — that includes retail stores, any tooling that we will do for new products, any line additionally that we set-up or if we do any civil construction for any of the adjustments required for any of these capex. So you can clarify this as maintenance capex, but it is — safer side, you can take it between the range of INR25 crore to INR35 crores.
Unidentified Participant
And sir, how much is the debt on the balance sheet, sir other than the lease liability?
Rajendra Gandhi
Net-debt is about INR150 crores now.
Unidentified Participant
Okay, this is short-term and long-term, sir.
Rajendra Gandhi
We don’t have actually long-term. This is all — overall net borrowings net is 1.28 crores.
Unidentified Participant
Okay. Sir, my last question, sir, at INR400 crores revenue size, I expected we to deliver 11% margin. So we got a hit a 1% business because of higher revenue expenditure in this quarter other than gross margin compression.
Rajendra Gandhi
There are three, I can tell you. One, we spend a little more on marketing about INR1 crore. People cost min, if you will compare it with the last year’s quarter three, there is an increase in people cost by INR1 crore, marketing INR1 crore, and we did a lot of maintenance which we charge it to P&L on our factories about INR3 crores overall.
Unidentified Participant
Okay. And sir, in the last quarter, you mentioned that you are also writing-off the acquisition of light business which you have done over the next three quarters.
Rajendra Gandhi
Portion of that we have written offset…
Unidentified Participant
How much that is part of this quarter, sir?
Rajendra Gandhi
It’s about INR1.2 crores.
Unidentified Participant
So that INR1.2 crore would be an extraordinary item then or it’s a — because it’s a write-off of…
Rajendra Gandhi
We have not separately called it, called off this, but we have written-off to the taxi, because that business we are not focusing now.
Unidentified Participant
Amortization of expenses.
Rajendra Gandhi
Yeah.
Unidentified Participant
And how much is remaining, sir, that would be written-off next quarter or all…
Rajendra Gandhi
INR1.2 crores over — I mean there are some tools that we have, we’ll accelerate the depreciation of these tools.
Unidentified Participant
Okay. Understood, sir. Thanks a lot, sir. Thanks a lot.
Rajendra Gandhi
Thank you.
Operator
Thank you. Next question is from the line of Natasha Jain from PhillipCapital. Please go-ahead.
Natasha Jain
Yeah, hello.
Operator
Go ahead, ma’am.
Natasha Jain
Thank you for the opportunity again. Sir, my question is just on the market-share. So you said that you’ve given a lot of schemes and offers in December and January continue. So can you indicate if we have — if you’ve got market-share from our peers, any sense or numbers as to what market-share you command versus your peers?
Rajendra Gandhi
We are dealing in various product categories and this is not very special offer for this year. From 2013 onwards, every year we have this property there where our consumers, our dealers and our distributors wait for this and this is an ongoing effort. And so different product categories will have different market-share. So there are several new product — example, if I tell you that for OTG, we are getting to leadership. So that is the kind of market-share acquisition is happening. On some of the products like index in, in our opinion, we must be at leadership. Therefore, of course, we are acquiring lot of market-share. So there are different products. I don’t think you can bucket it all-in one and say this is a market-share. And we don’t have a quantified comparative data to actually give you. We’ll try to do this maybe in the next two, 3/4, we’ll start doing this.
Natasha Jain
Got it. And sir, one last question now. I understand that you said that because you had done these offer sales, it impacted your gross margin a little. But see, this is something that we do every year. So this is a known information to us. Then do you think that we were optimistic in terms of giving 11% guidance in terms of EBITDA or has there been more demand slowdown than we actually anticipated, which way did it go?
Rajendra Gandhi
Both. So there is — we would have ideally wanted another INR10 crores additionally on our revenue for this quarter. And also maybe the contribution of this offer sales is a little higher. But I think overall for the year, we are in-line with our business plan. I don’t think we are way off. Of course, don’t come and tell me if we land up at 10.8% for the year, say it is lower than that 11% guidance. So that was the endeavor. So we — it is not that we are way away from that 11%. There could be a small variance versus the expectation.
Natasha Jain
Understood, sir. Thank you and all the best.
Operator
Thank you very much. Participants in the interest of time, we will take that as a last question. I’ll now hand the conference over to Mr. Rajendra Gandhi for closing remarks.
Rajendra Gandhi
First of all, thanks all of you for the patience and for listening. I hope I have addressed all your questions, but if you have any further inquiries, please feel free-to reach-out to us directly or contact our Investor Relationship partner, Orient Capital. Thank you.
Operator
[Operator Closing Remarks]