Houseware company Stove Kraft declares Q3FY22 result: EBITDA excludes an exceptional charge against profits of Rs. 2.9 crores in Q3FY22 & Rs. 7.8 crores in 9MFY22 from an aged receivable not pertaining to current period operations Profit After Tax (PAT ) is lower by Rs. 8.1 crores in 9MFY22 as the Company has started paying/providing for income taxes after setting off accumulated losses b/f from previous years Commenting on the Results, Mr. Rajendra Gandhi, Managing Director said, This quarter saw a tepid growth in revenue vis-à-vis last year. This was primarily driven by a higher base in FY20 since Diwali was in middle of November last year and consequently had a positive impact in third quarter of FY20. For this year, majority of the Diwali purchases occurred before 3 rd quarter and as a result volumes were relatively muted when compared to last year. During the current quarter, the Company witnessed cost pressures from raw material price increase. However, the Company did not pass on this increase to end-consumers as Company was expecting this increase to reverse, which did not happen. As a result, both gross margin and EBITDA margin saw a decline when compared to last year. However, the Company has increased its price in Q4 and going forward, the impact of raw material price increase will be limited on our margins. In addition, the Company continues to focus on backward integration of the facilities, thereby increasing efficiencies and reducing costs. EBITDA, Profit before Tax and Profit after Tax stood at Rs. 21.5 crores, 10 crores and 11.1 crores respectively We continue to invest and expand our product offerings both organically and inorganically. The Company is entering into branded modular kitchen segment and electric switches & accessories segment through acquisition of Metsmith and business of SKAVA Electric respectively. These segments represent attractive market opportunity and will allow us to offer additional products with an attractive value proposition to our clients. Both these businesses will leverage key strengths that Stove Kraft possesses – manufacturing expertise, strong brand recall and pan-India distribution network. We envisage to make additional investments in both these businesses to ramp-up capacity as well as automate production lines. We continue to focus on increasing our distribution and retail network across India and have added 7,182 retail outlets in Q3 FY22. This represents an increase of 11.3% vis-à-vis Sep 2021 and 36% vis-à-vis March 2021 . The expansion of distribution network coupled with increased product offerings and technology upgradation will offer significant growth opportunities in the future and also allow Company to increase its market share” Result PDF
Conference Call with Stove Kraft Management and Analysts on Recent Business Updates. Listen to the full transcript.
Financial Highlights: Revenue from Operations Rs. 577 crores, up 75% EBITDA Rs. 66 crores, up 38% Profit Before Tax (PBT) Rs. 46 crores, up 60% Profit After Tax (PAT) Rs. 36 crores, up 28% Return on Capital Employed is at 33.6% Return on Equity is at 21.6% Gross Debt stood at Rs. 53.4 crores Working Capital Days stands at 23 days Net Cash from Operating Activities for the first half stood at Rs. 27.7 crores Commenting on the Results, Mr. Rajendra Gandhi, Managing Director said, “Post the relaxation in lockdown restrictions from early June 2021, the Company has been doing well and has delivered a strong performance in Q2 FY22. Revenues in the quarter have grown by 53%. We have grown through all channels – general trade, modern retail and ecommerce. EBITDA and Profit Before Tax have grown by 13% and 19% respectively. During the year, the Company has focused on backward integration of the facilities which is helping in reducing costs and improving efficiencies. Profit After Tax for the quarter is lower by Rs. 9.2 crores as the Company has started providing for income taxes after setting off accumulated losses brought forward from previous years. During the quarter, we have increased our spending on branding and marketing. We believe that continuing to develop awareness of our brands, through focused and consistent branding and marketing initiatives is important for our ability to increase our sales volumes and our revenues, grow our existing market share and expand into new markets and new product categories. In the coming quarter, the Company is planning to launch Plastic Storage Containers. Also, we will have a full range of LED’s i.e., from 0.5 watt to 50 watt from the coming quarter. During the quarter, the Company introduced Distributor Management System and has implemented it successfully at 100% its outlets across the country. This tool helps improve operations and provide effective sales and inventory management related only to Pigeon products. This provides information on the right stocking patterns and enhances efficiency due to faster transactions. Our focus is on increasing distribution, increasing network in across the country and bringing more customers onboard through increasing our number of outlets. Over the first half of the year, the Company has added over 11,400 retail outlets, that is ~20% of the outlets as of March 2021. With a constant focus on technology upgradation and increase the level of automation, the Company plans to achieve greater efficiencies and cost reductions resulting in operational efficiencies and higher profit margins on a sustainable basis." Result PDF