Stove Kraft tanks 16% on weak December quarter earnings

In Q3FY22, Ebitda margin contracted 770 bps at 7.2 per cent as it witnessed cost pressures from raw material price increase during the quarter.

Shares of Stove Kraft tanked 16 per cent to Rs 715 on the BSE in Wednesday’s intra-day trade after the company reported a sharp 67 per cent year-on-year (YoY) decline in its profit after tax (PAT) of Rs 11.1 crore in December quarter (Q3FY22), due to higher operational cost. The home & kitchen appliances maker had posted PAT of Rs 33.50 crore in year ago quarter (Q3FY21).

At 11:30 am, Stove Kraft traded 14 per cent lower at Rs 726, as compared to 0.70 per cent rise in the S&P BSE Sensex. The stock has corrected 37 per cent from its 52-week high of Rs 1,135 touched on October 18, 2021. The company had made its stock market debut on February 5, 2021. It had issued shares at price of Rs 385 a piece.

In Q3FY22, the company’s revenue remained flat at Rs 298 crore, while earnings before interest tax and depreciation and amortization (ebitda) margin contracted 770 bps at 7.2 per cent during the quarter.

The company said it witnessed cost pressures from raw material price increase during the quarter. However, the company did not pass on this increase to end-consumers as company was expecting this increase to reverse, which did not happen. As a result, both gross margin and EBITDA margin saw a decline when compared to last year.

A tepid growth in revenue, primarily driven by a higher base in FY21 since Diwali was in middle of November last year and consequently had a positive impact in third quarter of FY21. For this year, majority of the Diwali purchases occurred before 3rd quarter and as a result volumes were relatively muted when compared to last year.

In Q3FY22, the company added 7,182 retail outlets, up 11.3 per cent over September 2021 and 36 per cent over March 2021. “The expansion of distribution network coupled with increased product offerings and technology upgradation will offer significant growth opportunities in the future and also allow Company to increase its market share,” the management said.