Stove Kraft (NSE:STOVEKRAFT) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty seven Earnings Conference Call of STOVEKRAFT Limited. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to miss from MUFG End Time. Thank you, and over to you. Thank you,. On behalf of MUFG End Time, I welcome you all to STOVEKRAFT Limited q one FY twenty seven earnings conference call. Today on this call, we have mister Rajendra Gandhi, sir, managing director mister Subhadeep Pal, sir, chief financial officer mister Chandru Kaluru, sir, vice chairperson and mister Hemant Kumar Puthari, sir, vice president, investor relations.

1:01 Before we begin the call, I would like to give a short disclaimer. This call may contain some of the forward looking statements, which are completely based upon our belief, opinion, expectation as of today. The statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. And with this, I would like to hand over the call to Gandhi, sir. Over to you, sir. Good afternoon. Good afternoon, everyone. On behalf of Stove Kraft Limited, I extend a warm welcome to all participants to the q one FY twenty seven financial results earnings call. We also have MUFG in time with us on this call, who are our advisors on Investor Relations. Along with me is Sandhu Kalgo, our Vice Chairman Mr.

1:47 Subhadeep Pall, our CFO and Hemant Kothari, Vice President, Investor Relations. We have uploaded our investor deck and earnings press release on the stock exchanges and the company's website. I hope everybody had an opportunity to go through them. We are pleased to report our strongest ever first quarter performance since inception, a particularly noteworthy achievement given that Q1 has traditionally been a seasonally softer quarter for the kitchen appliances industry. Our revenue has grown by 41.3% over the same period last year. This performance was delivered against the backdrop of global economic uncertainty, geopolitical tensions, supply chain disruptions, commodity price volatility and currency fluctuations.

2:39 Despite these external headwinds, STOVEKRAFT delivered a strong performance, outperforming the industry growth trends and further strengthening our market position, reflecting the positive impact of the strategic initiatives undertaken over the last few years. The quarter was marked by healthy revenue growth, meaningful margin expansion and profitability growth that significantly outpaced revenue growth, driven by the increasing benefits of operating and financial leverage. More importantly, the quality of growth continues to improve, supported by strong momentum across our general trade business, expanding retail footprint, premiumization led product innovation and disciplined execution across the value chain.

3:27 These results reinforce our confidence that the investments made in distribution expansion, brand building, supply chain capabilities and product development are beginning to develop sustainable outcomes. As we look ahead with strong channel momentum, continued traction in premium categories and expanding retail network and onset of the festive season in the coming quarters, we believe we are well positioned to build on this strong start and continue delivering profitable market leading growth. Turning to the product wise performance. Growth during the quarter was broad based across our key product categories, reflecting the strength of our diversified portfolio and ability to capture consumer demand across multiple segments.

4:13 The induction cooktop category delivered exceptional growth of 315.9% year on year, driven by strong underlying demand trends and our ability to effectively capitalize on the market opportunity following geopolitical disruptions. While the category witnessed extraordinary growth last year, demand continues to remain substantially above pre war level, indicating a structural shift in consumer adoption rather than a temporary spike. ICT contributed 27% of our total revenues during the quarter. We remain as a key growth engine for the business, reflecting our manufacturing capability which bring agility to meet demand. Beyond the industrial cooktop, growth remained healthy across our core categories, underscoring the resilience and depth of our portfolio.

5:01 The Project Google segment grew by 41.3% year on year and contributed to our overall revenues, while nonstick required a robust growth of 21.8% year on year, accounting for 21% of our revenues during the quarter. These performances were supported by strong brand acceptance, product innovation, expanding distribution reach, consumer inclination towards premium products and affordability due to reduction in GST. But small appliances and gas top categories with just temporary moderation, the small appliances category was affected by deficiency on the supply side as this was the lines and other resources that are allocated to the smaller appliances were utilized together to the surge in sudden demand for induction cooktop, which now has stabilized with all the additional requirement for induction cooktops in place.

6:00 They continue to represent a significant 275% of our revenue mix. The sustained growth across our core categories demonstrate the benefits of our diversified business model, ongoing premiumization initiatives and focused investment in product development and market expansion. The broad based growth strengthens our confidence in the sustainability of our growth trajectory and enforces our ability to deliver consistent value creation over the long term. Premiumization is emerging as a key growth theme at STOVEKRAFT as consumer preferences evolve towards higher value and feature rich products, continue to invest in innovation and category creation. Our focus on introducing differentiated products and other technology led kitchen solution is helping us create new consumer segments while improving product mix and realizations.

6:53 These initiatives are not only strengthening our brand positioning, but also enabling us to drive industry leading growth across categories. We believe Revivalization will continue to be a significant growth lever for the company and play an important role in driving both revenue growth and margin expansion in the years ahead. Moving on to channelized sales. Our diversified distribution portfolio continued to deliver strong results during the quarter, reflecting the strength of our omni channel strategy. General trade was a key highlight, registering an impressive 56.2% year on year growth, the strongest growth witnessed in the last three years, signaling a meaningful recovery and improving channel productivity. E commerce remained our largest channel contributing 31.8% of our total revenues, while general trade accounted to 28.6% followed by exports at 15.3%, modern retail at 13% and our own retail at 8.7.

7:53 Notably, our retail channel delivered an outstanding 86.3% year on year growth and 88.5% for three year calendar, supported by network expansion and increased consumer engagement. Further, we added 17 new stores under franchise model during the quarter, reinforcing our retail expansion strategy and advancing our long term objective of establishing 500 stand alone pigeon exclusive outlets by the year end 2027. This continued expansion not only enhances brand visibility and consumer accessibility, but also strengthens our connect with the consumers through a dedicated retail ecosystem supported by deeper distribution, growing retail partnership and a well diversified channel mix.

8:39 We remain well positioned to sustain our growth momentum, strengthen market share and drive long term value creation of key geographies. Now I will discuss Q1 FY twenty twenty seven financial performance. Q1 FY twenty twenty seven was marked by strong operational execution and improved profitability resulting in earned growth that significantly outpaced revenue. The consolidated revenue stood at INR480.6 crores for the quarter versus INR 340.1 crore in the previous quarter last year, hence reducing a growth of 41.3 year on year basis. Gross profit for the quarter stood at INR 190.4 crores versus INR130.4 crores in Q1 FY twenty twenty six, a growth of 46% year on year despite ongoing supply chain challenges and elevated raw material costs. Also, margins expanded by 127 basis points Year on, we are reflecting the strength of our brand portfolio, pricing discipline and operational excellence.

9:40 EBITDA stood at INR 53.8 crore in Q1 FY twenty twenty seven compared to INR 35.6 crore in Q1 of FY twenty twenty six, releasing a robust 50.9% year on year. Consequently, EBITDA margins improved to 11.2% from 10.5% in the corresponding period last year, standing by 71 basis points supported by operating leverage, a favorable product mix and disciplined cost management. PAT for Q1 FY twenty twenty seven stood at INR 17.1 crores versus INR 10.4 crores in Q1 FY twenty twenty six, showing exceptional growth of 63.5% year on year. The PAT margins for the current quarter stood at 3.5%.

10:28 Our return metrics also witnessed meaningful improvement during the quarter, reflecting capital productivity and prudent capital allocation. ROCE improved to 13.9% from 12.6%, while ROE increased to 9.3% from 8.3% in the corresponding period last year. These improvements demonstrate our ability to generate stronger returns from the capital employed in the business in greater value for shareholders. From a working capital perspective, the net working capital increased to forty five days in Q1 FY twenty twenty seven, which is much better than Q1 FY twenty twenty six and FY twenty twenty five, but is higher than the quarter four of FY twenty twenty six, primarily driven by strategic inventory buildup undertaken to ensure adequate quality availability, product availability ahead of the upcoming festive season and anticipated demand.

11:25 This proactive approach is aimed at supporting sales momentum, minimizing supply disruption and enabling faster market servicing during peak demand periods. Now I would now request the moderator to open the floor for questions and answers. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. The first question is from the line of Manoj Kouri from Equiris Capital. Please go ahead.

12:16 Yes. Thanks for the opportunity. Hope I'm audible. Yes, sir. You're audible. Please go ahead. Yes. First of all, congratulations on this set of numbers. As we said, we Sir, if you have to be a little louder, I think SP will It's better now? Yeah. Yeah. It's better now, sir. Yeah. So if we look at, obviously, we had a very strong quarter during q one. And when we look at the pickup of categories, induction cooktop, obviously, remains the out there. But when we look at the and even there, we have seen a healthy traction. So you have already highlighted about your preparedness for q two and q three in terms of supply chain management to avoid any disruption.

13:09 Can you throw some light how the growth is standing out? How should we be looking at from q two, q three point of view? Because there would have been some anxiety among consumers. They would have definitely... There would be a a demand in anticipation of LPC crisis, but there would be some structural demand tailwinds also. If you can highlight probably for rest of FY twenty seven, how we should look at the overall growth from q two onwards. That would be very helpful. Yeah. Thank you. Of course, your voice was not very clear, but I still... Whatever I gather, let me try to address it. Yes, you are looking at growth for the remaining three quarters. Let me guide you while you already know that the second and third quarter are larger quarters. They are all missed various particular seasons. Fortunately, this year, it is well spread. We have one in August, then early October, we have the kind of festivals.

14:13 And then we have November. So it is also November we have Diwali. These are spread over the period. This allows us to address the demand better. We are seeing strong kind of consumption in various of our product categories. And all the manufacturing facilities that we have set up in the last few quarters are all now up and running. So we are very confident of a strong performance vis a vis the last year. And the current period, this quarter, we could not roll out many of the innovations that we are in the pipeline. And some of our smaller appliances, we could not actually produce during this time because a lot of impetus given to the industrial cooktop, some of our lines and the resources. When I say resources people, being a manufacturing company, we had to reallocate some of these capabilities to produce industrial cooktop.

15:09 That being the case, but there is a strong structural shift in the consumption of this product itself, the cooking, the way people cook at Indian homes now. We believe that the traction for induction will continue. It will not be at the level of the spike that was there in the beginning of the quarter, but then we still see very high growth in the induction cooktop followed by cooking category. So overall, the the quarters ahead look very strong, sir. Right. Thank you, sir. Just to continue on this, so you said, like, there were few launches which have been delayed and now it has been done, which will be which will act as a growth driver for you guys. So cook... Cookware or probably cookers, so are these launches into these categories, and should we expect the growth in these two categories to continue in the coming quarters as well? Because even the growth year was very healthy during the first quarter.

16:12 Yeah. I think, actually, all the three, we are... Generally, our business is in product category divided over three degrees. The small appliances, cooktops, and cookware. For us, cookware is regular cookware and cookware. We see growth in all the three, but for the the categories, we see very high growth. The opportunities are very high growth. We also have pipeline of lot of innovation in all the three category of products. So that gives us the the additional confidence of high growth overall as a business. Sure, sir. And, sir, lastly, on the margin side, this quarter, we have seen margin improvement. There would have been some pricing power also because of the... Especially for the cooktops.

16:59 Now when we look at from a q two, q three, and q four point of view, are we still left with some price hikes or probably most of the RM pressures or rupee depreciation impact that has been passed on? And this margin improvement on Y o Y basis should be sustainable for the rest of the FY 2027? So yes, while there has been input cost pressure continuing, we have also addressed this by correcting our realization. We have increased our prices for the domestic market. We also are there is a favorable situation even in our exports. They have corrected their buying prices upwards to address the input costs.

17:49 With these initiatives and with the efficiency that are setting, we are very confident of the current margin levels and we are also confident of improving from here. We hope that on a year on year basis, we'll still there is some headroom and we'll be able to improve at least 1% on gross margin year on year. Sure, sir. Thank you, sir, and wish you all the best for the quarter, guys. Thank you. Thank you. The next question is from the line of Vinod Krishna from Aventis Health Wealth. Please go ahead. Thank you, sir. Am I audible? Yes, sir. We can hear you. Sir, can you highlight because we had the disruptions on export side from last 1.5.

18:38 So how is the export panning out? Is it just US or more than US and then IKEA? And how how should we think about revenue contribution from these two in the current year? Because last year, we had predicted a very high growth rate on exports and because of the tariff situation, we lost out on the opportunity. And over a two, if you can give this year export plus IKEA and over a two, three year where this export plus IKEA revenue can go to. So, yeah, the description of last year is behind us. We are back to normal and we'll grow actually grow even the current year. But way ahead for export is current as of last year, we had about 12% contribution to the revenue. As the company grows, we believe even in spite of the growth overall as a company, our export contribution in the next two years that is the current and the next year should get to 15%.

19:29 Sir, like, export and IKEA, how is it like if you can give the absolute numbers also how much IKEA will be and how much exports will be over the next two, three years? Absolute number will be difficult, but I'm telling you as a percentage of the revenue, it is definitely in the range of 15%, could be in the positive range of 15%. IKEA will be apart from this. Right? IKEA will be apart from No. We consider IKEA as deemed export. For us, both IKEA, Walmart has done all these company revenue we consider. This year will be good for us in terms of exports? We are continuing to grow, sir. Even the first quarter, we had reasonable growth. Sir, and second question, if you see September, like, q two was always best quarter for us, if you see. And we had a really good q one. So can we grow on last year's q two? This q two, like, you could... I'm not asking you the exact growth number, but can we grow on?

20:21 Because last year itself, it was four eighty for 75 gross September 25. Last week, we'll see the first quarter Historically, the q two is the strongest, and we will continue to be there. Obviously, because of Q1 was stronger, the Q2 has to be in line with that. It may not be exactly at the same rate of growth of Q1, but definitely there is a very strong demand that we are witnessing. So we believe that the q two will be as strong. Sir, can you highlight where is the growth coming from? Is it just again the induction cooker and cookware or it's like... Can you... If you can or is it something that's across? It is across the three categories. Our project business has grown by 41%. It continues. The demand is very high. We have to augment this demand. Are we are equipping ourselves with additional capabilities.

21:10 In fact, by by now, at the run rate that we are, we are already by volume numbers the largest. But then there's still unmet demand. And so we are addressing it with additional capacities. On the smaller appliances, we have capacity. In the first quarter, we had to let go some of our... I mean, capacity is being used for some other when used for intestine and other infrared products. But we have now augmented those capacities as well. So we will we are confident of a growth even in our small appliances. On the cooktop business, on the base of pre war level, definitely there is a huge room for growth. We continue to see the demand being higher than the pre war level. So for us, it's a mix of all these three products and all our channels are also growing. Our EVLs are growing at a good pace. We are seeing very high growth in general trade. E commerce continues to drive the overall contribution to the company's revenue and we are confident also about the export. So these are all a combination of all this. It's not driven by one particular category or one particular channel.

22:17 So we should see growth in q two also over last year. Yes. Even though it's a high base. Yes. Yes. See that margins going above 5% because you you used to you keep... Used to guide us around seven percent we can achieve in the long run. So when will we start growing about four, 5%, like, many years how many years? Leverage is already setting. We grow, they put increase increase the... Both revenue growth will lead to higher... Also, there is an improvement on our gross margin will lead to higher EBITDA and definitely because there is a kind of a fixed number below the EBITDA, all in... Incremental growth will flow. So you will see this continuously quarter on quarter. So this year also, will see a good growth despite q one being a very high growth. So that we can take. Though though q one was very high growth, of course, we we are very excited about this. Q one is one of the smallest quarter of the year. Generally, it is. Oh, yeah. But still, we can expect q two growth and q three growth low even though they are bigger quarters. Right?

23:20 We are very positive, sir. Sir, thank you very much, and all the best, sir. Thank you. The next question is from the line of from Credit One Asset Managers. Please go ahead. Okay. Am I audible? Yeah. Yeah. It is. Yeah. Now... Okay. So, sir, just... I have two questions. First, on your working capital side. So we have seen that working capital increased due to our inventory buildup for the fiscal season. So assuming a normal cash to demand assuming a normal cash to demand environment, so where do you expect working capital days to settle by end of twenty seven?

24:09 This is my first question. So to answer to your working capital days, see, q four for us is a is a base. But q one, we build the inventory for the year. So, historically, if you go to our q four of FY '25, we were at seventy five days. And if you will go back to q four of FY '26... Sorry, q one q one of FY '25 and q one of FY '26, we were at sixty nine days. We have improved improved to forty five days. So relating... Because our business is a little cyclical, seasonal, and so you'll have to look at it seasonally.

24:58 And also, we are now going to a straight line production plan. So irrespective of the cycles that we have, our Q1, Q2, Q3, Q4, we would want to have uniform production around the year. This optimizes our cost and better supply chain. It addresses the supply chain better. So overall, I will tell you, we are only improving on our working capital and so are the other issues. Okay, sir. Fair enough. Got it. Sir, my second and last question is around your integrated manufacturing capabilities. So as we have understand like about your integrated manufacturing capabilities, so are you witnessing any improvement in sourcing advantages versus import dependent competitors, particularly in the current geopolitical environment?

25:52 I think the demonstration of addressing the market or indexing cooktops when the whole Southeast Asian region was grappling for supply chain challenges in itself a demonstration of our capability. We have a very strong capability of manufacturing within our facilities and a very, very strong supply chain side capability both with... Within the country and also from the importing country. We import a lot of our inputs from China. We have very strong capability. I think definitely that is a differentiator with STOVEKRAFT when you compare with our peers. Thank you. The next question is from the line of Anand Mundra from.

26:40 Please go ahead. Good evening, sir. Congratulations on good results, and thanks for giving out detailed information in the presentation. Sir, I wanted to check about the benefit of JV with the Chinese entity which we have which we have entered last month, I guess. Yeah. The Chinese two, we have a WS, wholly owned subsidiary, where we would, in the future, want to domestically buy from China and export so that we get some advantage on the buying cost and drawbacks that accrue to the exporters from China. Also to streamline our large import of inputs that we do into the country. But we have a subsidiary JV where we want to address the challenge that the current producers of right like cookware and are facing.

27:32 We want to be strong before we get into these category fully. So we are we are getting into a manufacturing arrangement with a JV partner in China. The facility itself is among the largest or the largest in China itself. And we have started installing the machines and the current process is in progress. We believe by the end of this calendar year or before December, we'll be able to produce commercially the circles that are I mean, five like circles that are required for manufacturing the processing equipment and cookware. There is a huge demand for this globally and also in the country. Both induction cooking is also aggravated the demand, but overall, the efficiency of these cookware and pressure cookers is far higher compared to the plain stainless steel.

28:27 So there is a huge opportunity for us and is also to augment our own business for both pressure cookware and cookware. Noted, sir. So the thing, sir, our other expenses have gone up significantly in quarter quarter one. So that is in line with the revenue growth or slightly higher. So any thoughts on that, sir? Yeah. Hi. Good afternoon. Shubadip here. So as you can broadly see, the increase has happened in four clear buckets. We know we have grown well above our plan, and that has been possible only via constant focus on ensuring supply for our products, and this has driven demand fulfillment. To do this, we outsourced manufacturing of some key products on job work basis in the first quarter. And as a result, the job work charges as a percentage to sales grew by 1.2%.

29:20 This will this has helped in service fulfillment and also helped in flexibility for later. Second is marketing and business promotion expense grew by an additional 1.2%. As a strategy management, we believe to allocate a focused investment on product marketing at around 3.5% to 3.6%. And this is being charged to P and L on a linear straight line linked with the sales basis. The third point I want to highlight is while overall retail sales grew 86%, we have been consciously moving towards a more franchise operated store structure, which resulted in higher commission payout. Franchise operated sales mix moved up from 43% last year same quarter to 55%, 56% this year in Q1.

30:14 This resulted in a higher submission payout approximately 1% of sales. Additionally, we did some advanced CSR this first quarter, which will get annualized in coming quarters. So with all these above, we explained around three and a half percent higher percentage to sales, which partly got offset by some operating leverage and net net, we landed at around 18% of sales and other expense. Sir, how much CSR we have done as a percentage of PBT this quarter, sir? So we have done around 94 lakhs, around 3%. Okay. 1% higher than the stipulated numbers. Okay. This will get analyzed in coming quarters as per the company's acquisitions.

31:00 Yeah. Thanks. Thanks, sir, for the detailed clarification. This is really helpful. So the job work charges, which has increased in this particular quarter, so this will remain elevated or we will manufacture in house and it will not... How do we read it as an annualized expense for the company, sir? No. These are not continuing costs, but definitely they are elevated during the first quarter. We are a manufacturing company, we would prefer to do that way. But to address that spur, we had resorted to contract manufacturing, contractors and also manufacturing. It may not happen that immediately everything will get subsume. But in the quarters, this will all be part of our own manufacturing and this will not... I mean, this will come down in terms of percentage.

31:50 Both annualized spend, CSR, I mean, all this that you're seeing that increase 3% of other expenses will come come down back to the normal levels. When you analyze it, it'll look normal. Okay. Sir, one more question I had was about finance cost. Since we we have hardly any debt, why our finance cost is so elevated? Can you give the breakup between finance cost and lease expenses so that we know the actual finance cost of the company, sir? You want to do it immediately? Yeah.. So on a YTD basis, we are at 7 crore finance cost. Our finance cost is... Hello? Yeah. Yeah. Yes. Am audible? Yeah.

32:37 Our finance cost comprises of broadly three components. So one is fund based facilities where we have a cost of working capital lines, which is cash credit and working capital LCs. Second is the ROE leases. And third is the asset lease that we have taken. So clearly on the fund based limits, we have saved close to INR 2 crore year on year, whereas the asset lease that we took last year in Q3, that shows up as an increase. So while on a fund based and working capital cost, we have done better, the additional of 2 crore is happening because of the asset lease that came in last year Q3. Overall, as a percentage to sales, I would also like to add on a year on year basis, we reduced from 2.1% to 1.6%.

33:32 What is our interest on CCR? The rest is all in the supported. Okay. Sir, one... One question I had. Sir, we have guided for us in the TV presentation... TV interview, which you which you gave today. You you have mentioned that... Or the anchor was mentioning that you have guided for seven to 8% patent margin in two, three years. So from current three, 4% to seven, 8%, the key lever, I think, would be gross margin, sir, And any other or some operating leverage which may flow in. So any thoughts, where do you see gross margin over the next two, three years so that you can reach to 7%, 8% PAT margin? We are confident of increasing our gross margin at least a percentage year on year. Ideally, we would want to get upwards, want to be above 40% and we I think the gross margins will settle between 4042% on an ongoing basis.

34:30 Definitely, there will be financial leverage down that you will play out and with that, I think we'll be able to get... The trajectory will be towards that one, 7%. Because, sir, seven to 8% will only translate to 80 to 20% ROE, which is... Which in FMCG company That's our endeavor, sir. Is also our endeavor to get to there. Okay, sir. Thank you, sir. Thanks a lot, sir. Thank you. Thank you. The next question is from the line of from Capital. Please go ahead. Hello. Hi. Yes, sir. Many congratulations on a great set of results. So I just wanted to understand how you're looking at the material costs. And are there any price further price hike in the plan in the near term?

35:26 So I believe we are brand company, but still we are driven by cost plus model. Any price increase in the input costs, we pass it on. Definitely, there are some challenges in the input costs for the Q1. We have addressed that by increasing our realization, both for domestic and export. I think there's not a worry. There there is definitely price increase in the input costs. And so we have adjusted by our adjusting the realization prices. Sure. Sir, second question, wanted to understand since we've seen significant growth rate in the induction cooktop category, should we build in similar growth rates going forward for the q two, q three? Or can we see some moderation in that?

36:18 On an annualized basis, we still believe that will be 2x of last year. Sure. That... This is helpful, sir. That's all from my side. I'll get back in with you. Thank you. Thank you. The next question is from the line of from. Please go ahead. Hi. Thank you for taking my question. Sir, in this 41% revenue growth, how much can be attributed to volume? And my second question is, is this EBITDA margin of 11% is sustainable? And in the next three years, are we on track to clock 14% kind of EBITDA margin?

37:04 And another question is on channel inventory. If you can give some color on the channel inventory. So we always believe that we keep the channel healthy and never choke the channel. So we are not on track this because we... It's everyday up there. It's not that one of events that we do. On the contribution of growth is a combination of product mix, the value growth and the volume growth of three have contributed. And the higher growth of course has come from the induction cooktop. Otherwise, the overall growth is a combination of all of these three. We are seeing lot of premiumization into various category of products that we are. Example is our pressure cooker. We have grown higher in our sales with pressure cooker versus our aluminum pressure cooker, which also mean mean, is the product mix which is contributing.

37:57 There has been continuous pricing... A cost increase, which has led to price increase and realization increase. So there is a value growth, and definitely there is a volume growth in all the categories that we are currently capturing to. On the EBITDA margins, yes, that is where our inventories, we believe that we'll be able to grow at least a percentage even on the margin side year on year, which will ultimately in the range in the next two, three years, we should be in the range of 1415%. Okay, sir. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1. A reminder to all the participants to press star and 1 to ask a question.

38:45 The next question is from the line of from Limited Advisors. Please go ahead. Yeah. Thank you for the opportunity. Most of my questions are answered. I just had one question. Has IKEA... Have you started supplies to IKEA this quarter? No, not in the quarter reported. But when do we expect In that to this quarter, Q2 is when IKRAFT business is starting. Okay. It's already started in q two? Yes. Okay. Thank you. Thank you. The next question is from the line of Resham Mehta from Green H. Wealth. Please go ahead.

39:38 Thank you. Firstly, congrats on, you know, an industry leading growth rate. So while there seems to be a secular growth trend in the entire category driven by a few macro factors being in GST, tailwind and premiumization and, of course, induction cooktop. Right? So the first question, basically, on the growth out. Like, with this draw, you know, what kind of growth rates are we expecting, you know, say, q four onwards, you know, q three to four onwards when all of this will be there in the base, like the GST effect would have gone away. And, of course, induction cooktop demand would have also tempered. And the reason I'm asking this is, you know, because these types of growth rates, of course, do look sustainable.

40:26 And, you know, ultimately, I mean, it's not a toothpaste sort of a soap, you know, which gets over, and it has to be refilled. Right? So replacement cycle would... Demand would have also kicked in, you know, with the post COVID resurgence. So then, you know, q three, q four onwards, are we looking at, you know, let's say, around eight to 10% kind of growth for the category where, you know, largely premiumization would be, you know, the driver of this category? Or how do we look at, you know, the growth outlook q three, q four onwards? Okay. Let me... This is Chandeluk here. Let me try and answer this question. See, there are a few themes that are very obvious. You must have heard from the others also. Premium migration is one of them. Where Stove Kraft has been focusing its energies is to build a slew of products which are differentiated, unique, and which will address the premiumization team and also try and drive impulse to upgrade.

41:20 So what we are trying to do is actually create category growth and lead category next few quarters. And our endeavor is to actually take the non induction growth to nearly 20% if possible, if we are able to do everything right. And we believe that that is possible given the way the economy is growing and the way consumption is growing and the cohorts that we are addressing at this point in time. So that's what we are trying to do. So you're saying, like, once the high base sets in, then it's more of, you know will probably start with double digit revenue growth. Would that understanding be right? I could not. So can you say that again, please? Yes. What you're going to say is that, basically, once the high beta setting, from there on, the growth rates for us would be largely driven by, you know, these company led initiatives rather than, you know, the.

42:17 It will be by both, but we are looking at 15% plus going going across consistently in the categories we are operating in, given the kind of product development and innovations that we are buying up. Okay. The second question is on margins. So what has led to this quarter on quarter gross margin expansion of 100 bps? Is it that we were sitting on low cost inventory? Or or, you know, is it the the induction cooktop, you know Low cost. That has helped us? And the other related question is that on a blended basis at a company level, what is the kind of raw material inflation that we have seen and the vendor price hikes that we have taken at a company level so far in this calendar year.

43:05 Generally, our procurement is linked to the cost for a quarter, and our prices to the market are also for a quarter. Other than the exports, we are able to play that very safely. Though we are a brand company, we still are costless. If there is a pressure on input cost, we pass it on. But there is also an endeavor to now improve our margins. So whenever we correct our prices, we also want to account for the additional margin that we want. And that's how we are able to improve our gross margins. It's a purely cost plus situation for us at Stove Kraft. We are not while we would ideally want no price increase, cost increase, which will not lead to no definitely passing on price increase always a pain, but then that is how we work.

43:52 And generally, we control our input costs by having arrangements with our large suppliers for a quarter. So should I... This as that whatever cost inflation we have seen, we have kind of passed it on since it's a cost plus model. Absolutely. And and and what explains the 100 bps quarter on quarter gross margin expansion? That, again, when we address the price correction, we are also address the increased aspiration of our gross margin. And, you know, the last one was on this exchange program... Exchange campaign that, you know, we ran. Typically, we see this for a lot of them.

44:37 Right? So, you know, what is the revenue savings that, you know, we see from exchange programs that we have generally? I mean, you know, in the past several years, what has been the revenue content from such exchange campaigns? This particular, you know, quarter, since, you know, there's been a big, you know, uptrend that we are seeing in terms of the category growth, has this, you know, this number really shot up or is really diverting from our usual fast trends? See, while our business is seasonal, second and third quarter driven by festivities... Festivals seasons. So we call that manage the demand. We manage... Apply to cater to the requirement. And the first and the last quarters have been we have to sell create.

45:24 So for the first quarter, generally, have this exchange of our program that we we encourage our customers to upgrade themselves to new new products and certain things. So this everyday affair... Every year affair. In the first quarter, generally, we have this. We have had... We saw a very good response from our consumers and... But then that has been every year. Got it. And would you like to quantify? Like, I understand it may probably be a small because we generally do this in q one. No. So if you are not doing any of these programs, probably the Q1 will be even softer than what it is. So if this exchange offer program is a regular affair, maybe the consumer also wait. There's no reason, otherwise, generally a reason to buy other than the regular buying. And unlike the activities and driven by festivals and marriage season, there is a compulsive buying requirement.

46:24 So the first the first quarter, some of the sales were traditionally is coming from exchange. Just to add, you know, the... There there is a theme of upgrading that is anywhere very prevalent, number one. Number two, what happens is people move homes during the first quarter because they are, you know, school time transfers get affected, etcetera, etcetera. So actually, tickets get refurbished. We are using this. Now most of these exchange programs happen only in our reviews and general trade. And that's what excites them. And you have seen the benefits there. The reviews have grown by 80 odd percent and the Gela's rate has grown by 50 odd percent and those are things that are actually doing that. After these exchange programs, then we get into the festival sale like Mr. Gandhi said, where, you know, there is a clear shopping potential for people.

47:15 Sure. Thank you. Thank you. The next question is from the line of Vinod Krishna from. Please go ahead. Sir, thank you for the opportunity. This is the same question, actually, because, see, everybody has the same doubt that we can... If we can spend more time that because of the GST benefit and the induction cookware because of the Iran war, There's a huge growth that we have seen. So on this base, what are the factors, both external and internal, that the STOVEKRAFT is doing differently that we can sustain and not like you. So sir mentioned that... I don't get the name. Sorry. But sir mentioned that 20% growth non indexing cooker, we are very confident. So what gives us this confidence, both external and internal factors, if you can please elaborate that would clear us because people...

48:06 I think there is a doubt weighing on investors, if I can... If I make myself clear. Fundamentally, we are very strong levers at STOVEKRAFT. We are a manufacturing, brand marketing, distribution company. The three levers for us is of course the cost. We are able to control costs at the manufacturing and also the operational cost of the company is a very strong driver. We believe the consumers that we are addressing are highly cost conscious as long as we can make right quality products and then at right price and then make it available to the distribution through a proper distribution channel, the various channels that we address through and our growing brand. This is a unique position that we have. We are able to continue to acquire over the years. We are the probably the youngest company among the peer group, but we are able to definitely get to leadership position by volume in many of the categories.

49:01 This will continue to happen. I don't see a reason why this can stop. Along with this, we continue to innovate. We are also stronger today with having a very strong team, both domestic here in the country and also with the capabilities that we have set up in China. We are able to develop and bring to market products much faster at the right price and make excite the consumer even if this is not the customer that was looking for this product, if we can excite them to be consumers for this. All of these cost distribution and brand is what I believe is unique to STOVEKRAFT. The combination of all these three in one company is what is driving the growth. We are historically also growing the last ten years at about 17 to 18%, but for some setback with some product categories in the last two, three years, we have offset that growth with actual growth that you guys reported.

49:52 And so we believe that we'll be able to grow at the same CAGR that we were in the last ten years. And it is not too surprising for us to grow at 15% plus in the range of 15 to 20%. I don't think there's a challenge. To add that, you said what are the external factors? The external factors are obviously mature categories that are largely looking at upgrade and impulse buying. The external factor is also that there is a general overall growth in the economy, especially in the middle and upper middle end. Internal factor, apart from whatever mister Gandhi says, is one major thing. We have the most IT backward integrated factory. So every kind of technology for metalworking, for coating, for electronics, we are probably best placed to bring out the innovative products quickly to the market. So we're very, very agile, not just, you know, cost effective.

50:50 Got it. Sir, on on retail, what would be the average sales per store beyond which it will start contributing reasonably to the company? Like like, for us, anything beyond the 2.5 lakhs per store is profitable. We are currently trending at about 4.3 lakhs. And ultimately, target is to at least stabilize at 5 lakhs per store per per month. The last question, exports, you said you're running beyond US. Any updates on it or mostly our target is US? IKRA supplies are for global markets. We are also working with one large retailer in The UK already. Walmart in US and smaller retailers. For us at the moment with the current customer that we are, we are having enough of potential within the existing customers.

51:38 But we will always look at some quality customers and then in the years ahead, we'll add some. Sir, thank you and all the best, sir. Thank you. The next question is from the line of Rohan Advent from TAD Capital. Please go ahead. Yes, sir. Thank you for the opportunity and congrats on a good set of numbers. Sir, our induction cooktop revenues were 27% in this quarter, which is around INR 130 crores. Sir, could you tell us what were they in April, May, June and where they are right now on a monthly basis because the spike must have been very high and then there has this would have been some normalization. So where we are and where was it pre war at the monthly run rate, if you can share that? There is a good traction. There is a demand. It is in excess of pre war levels. So before the year, we began at the level that we were.

52:35 We are confident of this contribution from interruption cooktop to be in the range of at least 20% and a little above that as we progress over the year. Okay. So 20% contribution from this for the full year, FY twenty six revenue. This is what you are considering. Yes. Okay. Got it. Okay. Thank you, sir. That was my question. Thank you. The next question is from the line of Anand Mundra from. Please go ahead. Sir, thanks for the opportunity again. I wanted to check with... Check about chimneys and chimneys in the category. So wanted... Can you, sir, view on that category? We are very small, and this category is under penetrated, so we we can grow faster.

53:29 Yeah. See, look, I mean, we've got some fantastic movement in the chimney category. What we have done is actually revamp the entire range from normal AC motors to build AC motors, all but one. So that makes us extremely current and in fact ahead of many of our competitors. And given that we've got our own retail also to drive this, we are very confident that the Cheniere business is going to grow quite substantially. Manufacturing is our internal manufacturing, which makes us actually very competitive. And what we are also doing is get constantly building new designs and new features in this. We are very cognizant of the fact that this category has tremendous potential as we go along. And therefore, we are going to actually push the envelope on these two categories, both Sydney's and built in also as we go along.

54:24 Noted, sir. And for Gandhi, sir, I had one question about the IKEA businesses. So do you think IKEA can increase because the base of this year will be high. Next year, IKEA revenue can help us to report good numbers as because domestic market may not grow so much, particularly induction because of the high base. No. I appreciate that your confidence only on the IKEA business. Of course, we are also very, very excited about the IKEA business. It's a very high quality business, which is also giving us lot of learning. But our business is diversified into so many channels and so many products and with a huge innovation pipeline. Of course, this will also contribute. At the best, even at a large scale, I the full blown IKRAFT business, it may be five, 6% of our business.

55:18 Today, nothing of course, but then that is where there is then. There are several growth opportunities and drivers. You just know I sent through about the index... I mean, the chimney. It's a huge opportunity. There are several opportunities that we have built. We have, of course, built our strong capability on cast iron. We are setting up a completely automated line for pressure cookers for five. We have not even started this. This will be ready up and ready in the end of third quarter. And to augment and ensure that we are the we get to leadership in that. We have backward integrated even before we are fully invested in the Try Fly. We will be we are not still harness the power and the demand of the Try Fly cookware.

56:05 Within our cooking appliances, we are seeing very high traction in our rice cooker segment, OTG business. We have a huge headroom available in our mixer grinder. Very soon, you will see a range of products in the mixer grinder. It is one of the largest category in the small appliances, which either to we were our contribution from this category was very small. This line is this list of product categories is very large to be explained in one answer. And also our channels, we have opportunities in multiple channels. Our EVO stores growing at 86%. I mean, in the years to come at a larger base, there is a huge opportunity to grow. The general trade, which was kind of muted for the last two, three years, particularly, we are seeing very high growth. We continue to see that high growth. There is definitely scope for expansion in exports, including the IP business. So I'm not underplaying IPR opportunity. It is a huge and very exciting opportunity, but we have too many possibilities, avenues to grow.

57:15 Noted, sir. This is very helpful. Thank you, sir. Thank you. The last question is from the line of from. Please go ahead. Hi. Thank you again for the opportunity. Sir, can you highlight the growth in the South market as well as the non South market separately? We continue to grow on the South. That is our larger base. The North is bigger opportunities in smaller base. The absolute percentage growth, we are growing faster in the rest of the country versus the South. Particularly this division only contribute the contribution of our general trade. But other channels were more or less equally divided over the various regions of the country. E commerce, we are there across every in the country. We are thankful to the players apart from the new e commerce players. They have taken our, I mean, our products to every you can come out of the country. I can say to answer to your question in the general trade still, the growth opportunity in terms of percentage is larger than the rest of the country, and we are growing.

58:23 South is our strongest followed by best and then the North and the East. So that is the sequence of our current system. Okay. And what is the South contribution currently? It's upwards of around 50 around 50%. Okay. Got it. Thank you. Due to interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments. We thank you all for... I've shown so much keen interest into the company's performance, and we hope that we are able to answer your queries. But if you have any queries or want to know more, you can always reach out to our investor relationship team, both at MUFG or Neiman.

59:17 We will be do a answer all of you. Thank you. Have a great evening. On behalf of MUFG End Time, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.