Target: ₹900
CMP: ₹753.15
Stove Kraft (SKL) is witnessing a transition in kitchen appliance demand dynamics amid multiple tailwinds. The West Asia conflict disrupted India’s LPG supply chain, potentially triggering a structural shift in consumer behaviour toward induction cook-tops. The government is reinforcing this via several initiatives, which directly benefit established players like SKL.
Beyond induction cook-tops, the broader kitchen appliances category is emerging from a post-Covid three-year demand slowdown, with discretionary spending starting to recover across channels (particularly GT). SKL is also witnessing a ramp-up in exports (FY26 was hit by tariff and war-related disruptions), led by the commencement of IKEA supplies and new product additions for Walmart.
SKL’s heavy capex cycle (FY22-26: ₹500 crore) is now behind. With 95 per cent of products manufactured in-house, it can achieve about 2x revenue (₹2,500 crore vs ₹1,500 crore in FY26) in two-three years from existing capacity with limited incremental capex. Hence, we believe incremental revenue growth should translate more meaningfully into profits than in recent years, with improvement in return ratios.
Factoring in these positives, we build in FY26-28E revenue/EBITDA/EPS CAGR of 18 per cent/24 per cent/52 per cent, with 10.5 per cent/11 per cent/5 per cent FY27E/28E EBITDAM, and raise our TP by about 29 per cent to ₹900 (₹700 earlier) at 30x FY28E PER vs 11x FY28E EV/EBITDA earlier. Maintain Buy.