Stove Kraft Limited IPO | 10 Things You Must Know

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Stove Kraft Limited IPO | 10 Things You Must Know

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The fourth IPO to launch this calendar is here, The initial public offering of Stove Kraft Ltd, manufacturer of kitchen appliances, opens for subscription from today i.e, on January 25 to January 28.  Let's talk about 10 important points about this IPO you need to know before subscribing.

Also Read : How to Apply for IPO online (step by step guide)

1) About:

Stove Kraft is one of the largest Kitchen appliance suppliers in India. The company manufactures and sells kitchen solutions under the brand name of "Pigeon" and "Gilima" brands and planning to manufacture value, premium, and semi-premium kitchen supplies under the "Black + Decker" brand. Its product portfolio has 660+ kitchen solutions including cookware, cooking appliances, household utilities, and others. In 2019, it also started manufacturing Pigeon LED products.

It not just distribute its products in the Indian market but also export them to countries like the USA, Mexico, Kenya, Qatar, Sri Lanka, Fiji, Bahrain, Kuwait, etc.

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2) IPO Details:

The company is looking to raise close to ₹ 412 crore from the primary market via the fresh issue and offer for sale. The IPO offer comprises a fresh equity issue worth Rs 95 crore and a Rs 317.6-crore offer-for-sale by institutional investors Sequoia Capital India Investment Holdings I, SCI Growth Investments II and promoters Rajendra Gandhi and Sunita Gandhi.

IPO Date: Jan 25, 2021 - Jan 28, 2021
Face Value: ₹10 per equity share
IPO Price: ₹384 to ₹385 per equity share
Market Lot: 38 Shares
Listing At: BSE, NSE
Finalisation of Basis of Allotment: Feb 02, 2021
Initiation of Refunds: Feb 03, 2021
Credit of Shares to Demat Acct: Feb 04, 2021
IPO Shares Listing Date: Feb 05, 2021

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3) Financials:

Note: Despite being into operation for more than two decades and setting up a strong distribution network, it has not delivered up to the mark results. The company's business performance is substantially dependent upon its Pigeon and Gilma brands', which have been around for over 15 years.

Also read: Top 5 PSU Stocks with 30-50% Upside Potential in 2021

4) Shareholding Pattern:

Currently, company promoters Rajendra Gandhi and Sunita Rajendra Gandhi hold 1,84,43,919 equity shares, representing 61.31% of the pre-offer paid-up equity capital. Post IPO it will be reduced to ~54%.

5) Peer Comparison

Bigger peers like TTK Prestige and Hawkins Cookers, get a multiple of 61 times and 47.5 times respectively. Company’s brand value, margins and return on capital are lower than its peers.

Also read: Decoding Technical Analysis for Traders & Investors.

6) Valuations

Note: The metric is called price-to-earnings (P/E) ratio, which shows the price that the market is willing to pay for a stock based on its earnings. Higher the P/E, the more expensive the stock.

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7) Grey Market premium:

The current (On Monday) Grey Market Premium (GMP) price of Stove Kraft Limited IPO is ₹80-90.

8) Objects of the Issue:

The IPO proceed will be used for the following purposes;

  • To make the repayment or prepayment payment of company's borrowings fully or partially
  • To meet general corporate purposes.

9) Pros.

  • Since its inception, Stove Kraft has grown from a single brand small LPG stove manufacturing company to become one of India's leading manufacturers of kitchen appliances.
  • The company is present in over 30 categories of large and small kitchen appliances across its three brands. (Diversified product portfolio.)
  • Strong brand name.
  • Strong distribution network.
  • Well-equipped manufacturing facility.

10) Cons.

  • The Pigeon brand, which contributed 76.9% of the revenue in the first half of FY21, is under litigation.
  • The continuing impact of the Covid-19 pandemic.
  • Significant dependence on third parties for the distribution and sales.
  • Stiff competition from competing and local brands.
  • A significant portion of its sales is from south India, making it probe to fluctuation in regional economies.

Suggestion: Apply for only 'one lot' and Subscribe this issue good listing gains. (Only for high risk investors)

How to Apply for it?

This link will explain a step by step process to apply for the IPOs in India.

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Data source: Bloombergquint, ET, financialexpress and BusinessLine

Akshay Seth
Research Analyst (SEBI Regd.)
Linkedin |

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