STOVEKRAFT - STOVE KRAFT LIMITED Share Price

Question: Just wanted to understand how is the export piece grown and from when we can see the ramp up of the IKEA order.

Answer: In the first quarter, we grew by 25%, and for H1, about 19%. Exports, particularly in the U.S., have remained stable. Though there's a pause on new product development due to tariff stability concerns, we expect meaningful IKEA revenue to commence in the last quarter of this year, with significant growth in the next year. We're optimistic about our exports and guiding for 50% growth, though tariff delays may impact that expectation.

Question: On the domestic front, do you feel the momentum could sustain going ahead as well for the next year?

Answer: Yes, the momentum post-Diwali is strong. While we don't have a direct Diwali comparison, the current sales demand is high compared to last year. Despite seasonal sales slowing post-Diwali, our data shows sustained consumer interest in our products, indicating continued demand.

Question: Non-stick cookware volumes have declined Y-o-Y despite value growth. Could you share the reasons behind this volume drop?

Answer: The volume drop isn't a true reflection of performance. Our average selling prices (ASPs) have increased due to a shift towards higher ASP cookware categories. While volumes may appear to decline, this is primarily because we're focusing on more premium segment offerings that drive our value growth, rather than overall volume metrics.

Question: Had it not been for GST-related channel disruption, what would our growth have looked like?

Answer: We estimate a loss of about Rs. 15-20 crores in potential revenues during this disruption. Although we expect some of these sales will not rebound immediately, the long-term impact of reduced GST on pricing will boost affordability for consumers, positively influencing demand.

Question: Aluminum prices have been rising. Do we see this as a threat to our margins?

Answer: We operate on a cost-plus basis and typically pass on price increases. As we currently enjoy quarter-minus-one pricing and will continue this strategy, we are prepared to adjust pricing as necessary to mitigate aluminum cost increases and maintain margins.

Question: Are we spreading ourselves too thin geographically with the rapid expansion of our stores?

Answer: While we are stronger in the South, our focus will be on expanding in North and West India. Current revenue contribution from the South is about 75%, but we aim to grow in other regions to balance this. Our approach ensures we optimize our retail presence without overextending.

Question: How many stores have achieved breakeven out of the 296 stores?

Answer: We have relocated about 14 stores not reaching profitability within the first six months. Our breakeven point is low, and we currently have not recorded any stores that are bleeding financially. Most stores average around Rs. 3.81 lakhs in revenue, surpassing our breakeven target of Rs. 2.5 lakhs.

Question: For guidance on gross margin this financial year, given the increase in raw material costs?

Answer: We achieved a gross margin of 38.5% in Q2, and we believe margins will improve in the third and fourth quarters. Our aim is to reach about 39% for the year, with slight variations, but we're confident in achieving closer to this target.

Question: Can you provide color on the South and non-South performance in Quarter 2?

Answer: We are currently at a 40-60 distribution between South and non-South. Exact figures are being compiled, but sales are stronger in the South, contributing to our overall revenue. We're progressively diversifying our presence in non-South regions.

Question: Are there any plans to increase the average store revenue going forward?

Answer: Yes, we aim to increase the average store revenue from the current Rs. 3.81 lakhs. We expect, within the next 6-12 quarters and with the addition of exclusive products, to reach an annual revenue of Rs. 60 lakhs per store.

Question: What are the capital allocation priorities with respect to your current debt equity ratio of 0.4?

Answer: Our gross debt is approximately Rs. 180 crores. We aim to be debt-free within the next four quarters through improved working capital management. Our focus will be on reducing this ratio, prioritizing efficiency in capital allocation and retail expansion.