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Stovekraft (SKL) logged a strong Q4, with revenue up 32% YoY led by robust growth across verticals (ex gas cooktops) amid gas supply shortages. EBITDA grew 26% YoY; EBITDAM fell by 30bps QoQ to 9.2% on a 80bps QoQ grossmargin (GM) drop, largely offset by better operating leverage. The management gave guidance for FY27 revenue growth of 15%, led by small appliances, rampup in IKEA supplies (from Q1FY27; full potential at Rs2-2.5bnpa), and export normalization. So far, a 10% price hike has been taken to counter the rise in commodity cost. From Jun-26, price hikes, pending due to negotiations, would be taken in export supplies too. Long-term GM is expected to range in a similar territory, with potential for a ~1% pa rise as volumes scale up. Focus for FY27 is to protect the 11% EBITDAM, with SKL confident of operating leverage driving further improvement as revenue sees growth. With majority of the capex cycle now behind, SKL aims for Rs25-30bn revenue in the next 2-3Y without any meaningful incremental capex. We roll forward to Mar-28E and retain BUY while raising Mar-27E TP by ~8% to Rs700 (from Rs650) at 11x FY28E EV/EBITDA. The 10% change in our EPS estimate is only due to a change in the accounting policy for lease liabilities and does not affect our valuations.

Strong topline growth; EBITDAM down QoQ due to gross margin contraction

Revenue grew 32% YoY on robust growth across segments ex gas cooktops. EBITDA was up 26% YoY, but EBITDAM fell by 30bps QoQ to 9.2% due to 80bps QoQ GM compression, partially offset by lower staff costs and other expenses. Adj PAT grew 318% to Rs61mn.

Earnings call KTAs

1) The mgmt guides to FY27 revenue growth of >15% on strong growth in small appliances, ramp-up in supply to IKEA, and export normalization; on induction cooktops, post-GST reduction, demand has seen a continuous surge, with the pipeline running empty; near-term outlook is strong.

2) IKEA revenue to commence from Q1FY27; 3 product lines awarded – Line 1 starts in Q1, Line 2 by Q3, Line 3 by Q4; full-capacity revenue potential: Rs2-2.5bn.

3) Exports contributed 8.7% of revenue in Q4FY26 and 11% for full FY26. Ahead, exports expected to grow faster than company average. Earlier disruptions in export business have largely normalized, and SKL is now the preferred supplier for existing global customers.

4) SKL targets Rs25–30bn revenue over the next 2-3Y which is achievable from current capacity. GM to stay broadly at current levels, with potential for ~1% pa improvement with scale-up. For FY27, focus is on protecting 11% EBITDAM, with the mgmt confident of operating leverage driving further improvement as revenue grows.

5) Price hikes for covering commodity cost increases have been implemented. Effective Jun-26, export price increases, which had been delayed till now, have also been agreed upon and will come into effect soon.

6) On induction cooktops, SKL is better positioned than most peers due to its high level of backward integration. Unlike typical assemblers who import the entire unit, SKL manufactures its own PCBs and sources PCB boards locally. The main exception is glass tops, which are currently not manufactured domestically in India. Overall, 33–35% of content is still imported. SKL has a strong sourcing team actively working with China to manage this effectively.

7) FY27 capex guidance: Rs400-500mn, with the major capex cycle now largely behind.

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