By Suhel Khan
The super investors of India, or as we call them, Warren Buffets of India, are a rare breed. It is almost impossible to crack the code when it comes to decoding their buying or selling decisions. So, when some of the most well-known and widely followed super investors go after one stock, it is time to sit down and take notes.
The company in question is one of the leading brands for home and kitchen appliances in India, which boasts of a substantial market share.
Vanaja Sunder Iyer (Networth Rs 888 cr) and Dolly Khanna (Networth Rs 452 cr) just bought 1.36% and 1.07% stake respectively in this company.
The interesting thing to note there is that ace investor Ashish Kacholia (Networth Rs 2,901 cr) has been holding a 1.75% in the company since March 2022.
This even though the company’s debt grew from Rs 78 cr in FY22 to Rs 146 cr in FY24, which was apparently for expansion.
The income tax department had also conducted search operations at various business premises of the company. The company has not received any formal communication from the IT department regarding the findings of this investigation.
Cut to the end of 2024, the company added 908,000 new customers and 19% of its overall purchases took place through repeat customers, as per its investor presentation from November 2024.
What is it that the Warren Buffets of India are seeing in this stock?
Let us take a look at this company to try and find out.
Stove Kraft Ltd (SKL)
The company is a leading home appliance brand that just completed 25 years in business in 2024. It manufactures a wide range of kitchen solutions under Pigeon (value), Gilma (semi-premium) brands and acts as an exclusive partner for kitchen appliances of the BLACK + DECKER (premium) brand.
The products comprise cookware and cooking appliances, while the home solutions consist of various household utilities, including the recently introduced LED bulbs, oxymeters, etc.
With a current market cap of Rs 3,042 cr, the company has managed to reduce its overall debt from Rs 371 cr 7 years back to Rs 295 cr currently.
Now, we would never be able to find a definitive pattern in the buys/sells of these super investors, but for SKL, we can guess and zero down on some very strong points…
Sales, Profits and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
When it comes to sales, the company has recorded some very impressive numbers in the last 5 years. The sales grew from Rs 641 cr in FY19 to Rs 1,361 cr in FY24. This is a compounded growth of 16%.
The company’s December quarter end numbers are still not out as of 18th January 2025, but up until the quarter ending September 2024, the company had already recorded sales of Rs 730 cr.
These recent numbers can be attributed to the company’s recently introduced range of appliances like the electric pressure cooker, Electra, the Pigeon Cosmic glass cooktops series, 12 litres Air Fryer OTG, Jumbo Sandwich Griller, the Deluxe series of chimneys.
Now wonder the sales numbers are translating to solid net profits.
The net profits of SKL grew form Rs 2 cr in FY19 to Rs 34 cr in FY24, which is a compounded growth of 79%.
Now that right there is a number that could grab the attention of investors like Vanaja and Dolly.
To add to it, the EBITDA grew from Rs 30 cr in FY19 to Rs 121 in FY24. That is a compounded growth of 32%.
All of this together pushed the share prices for the company to see a good upswing. From Rs 445 at the listing in February 2021, the share price saw an all-time high of Rs 1,131 in October 2021.The current price is Rs 920 as on the closing on 17th January 2025, which means the stock price has seen a jump of 106%.
Stove Kraft Ltd Share Price
As for the valuations, the company’s shares are trading at a P/E of 89x which is a high number. Especially when compared to the industry average 73x. The 10-Year average P/E of the company is 44x while the industry average is 55x for the same period.
The Way Ahead:
The company is on a growth and expansion spree!
As of Q1 FY25, the company had 191 stores across 11 states and 49 cities, up from 59 stores in April 2023. It expanded beyond the southern states, opening stores in the Delhi NCR region. After launching its franchise model in November 2023, it onboarded 19 franchisees in FY24 and converted 23 stores to a franchise-operated model in Q1 FY25 to improve cash flow.
The company had plans to open 75 more stores in the next 12-18 months, targeting 25-30 new stores each quarter.
As per the November 2024 investor presentation, the company had 213 stores in 13 states & 54 Cities of India including Gujarat, UP, Punjab. An additional 22 new stores in Q2FY25.
The government policies are also in favour of the company’s growth, with initiatives like:
- Shift from unorganised to organised sector with implementation of GST.
- Lower tax brackets (5%, 12% and 18%) used for Indian Kitchen Items vs excise +VAT taxed at ~31%.
- With the Pradhan Mantri Ujjwala Yojana which targets to provide 5 Crore LPG connections to under privileged women, the rural penetration stands to benefit.
Add to these the key growth drivers the company is relying on, like the long due move towards aspirational lifestyle from functional kitchen tools, the advent of modular kitchen due to rising demand of space utilization, growth of e-commerce and easy finance options etc.
Should You Follow Ashish, Vanaja and Dolly?
While the numbers for Stove Kraft are very lucrative, a little caution is always warranted.
Yes, Ashish Kacholia, Vanaja Sunder Iyer and Dolly Khanna have bought into the stock. But these are ace investors, whose buy and sell strategies are only known to them.
Plus, there are no major domestic or foreign institutional investors invested in the stock.
However, the company is on an expansion and growth spree. The company’s Managing Director Rajendra Gandhi said in the last annual report “Higher market penetration, extensive distributor network in the domestic and international markets, strong brand name combined with changing favourable demographics like rising number of nuclear families and the change in consumption patterns resulting in shorter replacement cycle will continue to serve as levers of Stovekraft’s steadfast performance.”
Disclaimer
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Suhel Khan has been a passionate follower of the markets for over a decade. During this period, He was an integral part of a leading Equity Research organisation based in Mumbai as the Head of Sales & Marketing. Presently, he is spending most of his time dissecting the investments and strategies of the Super Investors of India.
Disclosure: The writer and his dependents do / do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.