Stove Kraft IPO Review

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Stove Kraft IPO – Basic Details

Before we dwell into the specifics of this Stove Kraft IPO, here are some data points for your reference:

 

Stove Kraft IPO – Background

Steve Kraft Limited is an emerging brand in the kitchen and home solutions segment. They are engaged in making kitchen appliances and are quite well known for their pressure cookers. The kitchen solutions of the company include cookware and appliances for cooking.

The home solutions offered by Steve Kraft include household utilities like consumer lighting, etc.  Also, the company is a market leader in selling freestanding hobs and cooktops. They sell their diverse kitchen solutions under the brands “Pigeon” and “Gilma”.

They are about to commence their solutions under BLACK + DECKER brand. “Pigeon” and “Gilma” brands have been in the Indian market for more than 13 years.

The brand “Pigeon” was even ranked as one of the “India’s Most Admired Brands 2016” by White Page International. The company caters to a diverse range of customers whose requirements fall into the range of value, semi-premium and premium kitchen solutions.

Steve Kraft Limited has 2 manufacturing facilities located in Bengaluru and Baddi.

The company is coming up with an IPO in the next few days for retail business funding. In this detailed Steve Kraft IPO review, we will talk about specific aspects such as the company background, financial health of Steve Kraft, risks and strengths of the company, specific IPO dates etc.

Hopefully, by the end of the review, you will be able to take a call on whether to go ahead with the IPO investment or not.

Stove Kraft IPO – Data Points

Stove Kraft IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of (undisclosed) lakh Equity shares and the face value shares will be ₹10 each share. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per equity share. The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares.

The offer consists of a fresh issue of up to (undisclosed) lakh equity shares aggregating up to ₹145 crores and an offer for sale of up to 71,63,721 equity shares by selling shareholders.

• Up to 6,40,906 equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by Rajendra Gandhi,
• Up to 2.5 lakh equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by Sunita Rajendra Gandhi,
• Up to 13,11,205 equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by Sequoia Capital India Growth Investment Holdings I and the rest;
• Up to 49,61,610 equity shares, aggregating up to ₹(undisclosed) lakhs are being offered by SCI Growth Investments II.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on September 21 2018, the fresh issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on September 24 2018, the offer has been approved by them.

SCI and SCI GIH gave their approval for their offer for sale of equity shares through consent letters dated September 21, 2018, and Rajendra Gandhi and Sunita Rajendra Gandhi gave their approval for their offer for sale of equity shares through consent letters dated September 20, 2018.

Stove Kraft IPO – Financial Performance

The company has been making losses and has negative Earnings Per Share for the last 5 financial years.

The total revenue of the company increased by 3.21% from ₹517.95 crores in the financial year ended March 31, 2017, to ₹534.59 crores in the financial year ended March 31, 2018.

 

The losses decreased from ₹19.25 crores to ₹12.76 crores during the same period. The return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016,  is (29.88)%, (11.58)% and (7.14)%, respectively.

The net asset value (NAV) per equity share as of March 31, 2018, is ₹(94.53).

Stove Kraft IPO – Objectives

The Stove Kraft IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of shares in the IPO are as follows:

• For repayment or prepayment of some or full amount of borrowings taken by the company
• For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Stove Kraft IPO.

Stove Kraft IPO Events

If in case you are looking to apply for this IPO investment, then you must be aware of the specific dates of different events related to the IPO.

Here is a quick look for your reference:

 

Stove Kraft IPO – Recommendation

Let us now discuss some of the key strengths and risks related to the business of the company.

One of the biggest strengths of the company is the diverse preferences of customers it caters through value, semi-premium and premium products and solutions. Their brand “Pigeon” is quite well known in the Indian market and contributes around 81.61% to the total sales of the company.

Another major strength of the company is its widespread network which comprises of around 363 distributors in over 23 states.

The company is also quite focused on providing quality products to achieve customer satisfaction in all the segments which are reflected in the fact that the company was awarded the “Gold Award” by Quality Circle Forum of India.

Their focus on innovation of products to meet the changing needs of their customers is also a positive factor for the company. The company has experienced growth in terms of the distribution network, portfolio of brands, manufacturing and warehouse infrastructure over the past few years.

The strategies of the company related to expansion in terms of geographies and products seem promising.

Now, let us look at some of the important risks related to the business of the company.

One of the biggest risks for the company is that one of their most well known and important brands, “Pigeon” is under litigation and there is no guarantee that they will be able to protect the trademark.

The operations of the business are dependent on third parties for product development and sales and they have no long-term contracts in place with them.

The company, its promoters, Directors, etc. are involved in certain legal proceedings and any adverse ruling in them may pose a risk to the overall profitability of the company. Certain criminal and civil proceedings are pending against their promoter, Rajendra Gandhi. He may also have to vacate his Directorship from the company.

Stove Kraft Limited is also exposed to the risk of competition from domestic players. Their manufacturing facility in Bengaluru has some parcels of land which may be subject to regulatory action.

The concentration of the franchisee stores of their brand Gilma in the southern parts of India is another risk factor.

The company requires certain permits, licenses, etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

The company has short-term as well as long-term borrowings of around ₹115.94 crores as of August 31, 2018, which will have an impact on the financial health of the company.

After analysing various aspects of the company, it can be said that investors must remain cautious and read the Draft Red Herring Prospectus carefully before deciding to invest in the Stove Kraft IPO. In other words, the Stove Kraft IPO can only be applied for in case you have a decent risk appetite.

Nonetheless, if you are looking to apply for Stove Kraft IPO, let us assist you in taking the next steps forward. Just fill in some basic details in the form below and a callback will be arranged for you:

 

Stove Kraft IPO – Management Information

Currently, there are 6 Directors on the Board of Stove Kraft Limited.

Rajendra Gandhi is the Managing Director of the company. He passed the S.S.L.C. exam of the Karnataka Secondary Education Examination Board. He founded the company in the year 1999 and has an experience of more than 19 years. He is responsible for taking care of the daily activities of the company.

Stove Kraft IPO Advisors Information

Edelweiss Financial Services Limited, IDFC Bank Limited and JM Financial Limited are acting as Book Running Lead Manager to the issue.

Karvy Computershare Private Limited is acting as the Registrar for the Stove Kraft IPO. Cyril Amarchand Mangaldas is acting as Indian legal advisor to Stove Kraft Limited. L&L Partners is acting as legal advisor and Duane Morris & Selvam LLP is acting as a special international legal advisor for the book running lead managers.

AZB & Partners is acting as legal advisor for investor selling shareholders.