Stove Kraft Limited reported robust financial performance for the fiscal year ended March 31, 2026, highlighting disciplined execution and significant balance sheet strengthening. Revenue from operations grew 10.9% year-on-year to ₹1,607.4 crore, supported by a wider category mix and multiple routes to market. Profit after tax (PAT) increased by 9.1% to ₹42.0 crore, reflecting improved operational efficiency and margin expansion.

The most notable development was the substantial improvement in liquidity and debt reduction. Net debt declined sharply from ₹176.8 crore in the previous year to just ₹27.1 crore, a reduction of over 84%. This deleveraging was facilitated by enhanced internal cash generation and disciplined working capital management.

Financial Performance

Gross profit grew faster than revenue at 12.7%, leading to an expansion in gross margin by 60 basis points to 38.7%. This margin improvement was attributed to manufacturing integration and an evolving product mix that favored higher-value categories. EBITDA stood at ₹166.1 crore, representing a 10.3% growth over the prior year.

Cash Flow and Working Capital

Cash flow from operations more than doubled to approximately ₹258 crore from ₹130 crore in the previous year. This surge in cash generation was underpinned by a dramatic tightening of the working capital cycle, which reduced from 64 days to just 23 days. Lower inventory and receivable days, combined with higher payable days, released significant capital for the business.

Return on capital employed (ROCE) improved to 11.2% from 9.6% in the prior year, signaling better utilization of deployed capital as the company moves into a phase of higher capacity utilization with lower incremental capex requirements.

Operational Highlights

The company expanded its exclusive retail footprint to 329 stores across 22 states and 151 cities, adding 67 new outlets during the year. Own retail contributed 7.5% of total revenue. Induction cooktops delivered strong value growth of 23.9% and volume growth of 11.7%, indicating growing consumer adoption of electric cooking solutions.

Strategic initiatives included a partnership with IKEA, for which the company invested ₹58 crore in dedicated tooling and infrastructure. Production and revenue recognition from this partnership are expected to commence progressively in FY27. The company also entered the HoReCa segment with the launch of heavy-duty infrared cooktops.

What the Numbers Show

A key analytical observation is the divergence between top-line growth and bottom-line leverage. While revenue grew at a healthy double-digit pace, the company prioritized balance sheet repair over aggressive expansion. The near-doubling of operating cash flows relative to PAT suggests that earnings quality has improved significantly, with profits being converted efficiently into cash rather than getting trapped in working capital. This shift provides Stove Kraft with greater financial flexibility to fund future growth internally.

Stove Kraft Limited reported its highest-ever quarterly revenue in Q1FY27, reaching ₹4,805.83 million, a 41.3% year-on-year increase from ₹3,401.07 million in Q1FY26. The growth was primarily driven by a massive surge in induction cooktop (ICT) sales, which contributed 27% to total revenues, and robust expansion across general trade and retail channels. Net profit after tax (PAT) rose 63.5% to ₹170.56 million, while EBITDA stood at ₹537.51 million, reflecting strong operating leverage despite elevated raw material costs. This performance marks the company's strongest first-quarter result since inception, defying typical seasonal softness in the kitchen appliances industry. Management highlighted that this financial strength positions the company well for sustained profitable growth amidst global economic uncertainties.

The Board of Directors approved the unaudited financial results on August 03, 2026, pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results were reviewed by the Audit Committee and approved by the Board. The Financial Statements have been prepared in accordance with Indian Accounting Standards (IndAS) prescribed by section 133 of the Companies Act 2013. Statutory Auditors Price Waterhouse Chartered Accountants LLP issued a limited review report. Pursuant to Regulation 30(6) of SEBI (LODR) Regulations, 2015, the audio recording of the earnings call held on August 04, 2026, has been made available for investor reference.

Financial Performance Highlights

Stove Kraft's operational efficiency improved significantly, with gross margins expanding year-on-year to 39.6%, up from 38.3% in Q1FY26. This expansion occurred despite ongoing supply chain challenges and higher input costs, underscoring effective pricing strategies and brand strength. Profit before tax expanded by 68.5% to ₹224.78 million from ₹133.43 million in the prior year period. Employee benefits rose to ₹55.9 crore and other expenses to ₹85.6 crore.

Segment and Channel Growth

The Induction Cooktop (ICT) segment emerged as the primary growth driver, recording exceptional value growth of 315.9% year-on-year and 100.3% quarter-on-quarter. This surge was supported by resilient demand and the company's "Gas to Grid" marketing initiative, which capitalized on LPG cylinder shortages and shifting consumer preferences toward electric cooking. Other categories showed mixed performance: cookers grew 41.3% and non-stick cookware 21.8%, while small appliances declined 2.2% and gas cooktops fell 6.9%.

Channel-wise, General Trade recorded a 56.2% YoY growth, crossing the 56% mark for the first time in three years. Modern Retail delivered 51.6% growth, and the company's own Retail outlets saw an outstanding 86.3% YoY increase. E-commerce revenue grew 38.5% to ₹152.7 crore, maintaining its share at approximately 31.8% of total revenue. The company expanded its physical footprint by adding 17 new stores in Q1, bringing the total to 346 outlets across 23 states.

Working Capital and Returns

A key analytical observation is the divergence between inventory buildup and receivable management. While net working capital days increased sequentially to 45 days from 23 days in Q4FY26, this was a strategic inventory build-up ahead of the festive season, particularly for long lead-time ICT products. Despite this increase, inventory days improved year-on-year to 45 days from 69 days in Q1FY26, extending a positive working capital trend observed over the last three years. Return on Capital Employed (ROCE) stood at 13.9% and Return on Equity (ROE) at 9.3%, both showing improvement during the quarter, indicating enhanced capital efficiency.

Corporate Governance and Regulatory Updates

The Board approved the reappointment of Anup Sanmukh Shah as an Independent Director for a second term of five years, effective November 02, 2026, and Neha Gandhi as Executive Director for a further five-year term starting September 30, 2026. The filing also disclosed ongoing income tax assessment proceedings following search operations in November 2023, with demand notices aggregating to ₹13.5 million pending appeal. Management believes these proceedings will not materially impact the company's financial position. Furthermore, the Board granted in-principle approval for incorporating a wholly-owned subsidiary in China to facilitate overseas direct investment.

What the Numbers Show

The earnings call transcript reveals that management expects gross margins to settle between 40% and 42% on an ongoing basis, aiming for a long-term PAT margin of 7% through financial leverage. Exports, currently contributing 15.3% of revenue, are projected to stabilize around 15% of total revenue over the next two years, with IKEA supplies commencing in Q2FY27. The company anticipates continued high growth in non-induction categories, targeting nearly 20% growth through premiumization and product innovation, reinforcing its strategy of diversified revenue streams beyond the ICT spike.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE00IN01015/cd777f4d-e40b-41ce-a05a-03a5ef6f8200.pdf