Stove Kraft Limited (STOVEKRAFT) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Storecraft Limited Q4 and FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Vidi Vasama from MUFG Insight. Thank you, and over to you.

Thank you, and good afternoon, everyone. On behalf of MUFG End Time, I welcome you all to Stoecraft Limited Q4 and FY26 Earnings Conference Call. Today on this call, we have Mr. Rajendra Gandhi, Sir, Managing Director, and Mr. Ramakrishnan Pindagas, Chief Financial Officer, Mr. Hemant Kumar Kothari, Vice President, Investor Relations, and Mr. Subdeep Pal, VP Finance. 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 beliefs, opinions, expectations as of today. The statements are not a guarantee of a future performance and involve unfortunate risk and uncertainties. And with this, I would like to hand over the call to Gandhi, sir. Over to you, sir.

Thank you. Good evening. Good evening, everyone. On behalf of Stoutcraft Limited, I extend a warm welcome to all participants to the Q4 and FI26 Financial Reserves Earned Court. We also have MUFG in time with us on this call, who are our advisors on investor relations. Along with me is Mr. Ramakrishna Pandalia, our CFO, Eman Kothari, Vice President, Investor Relations, and Mr. Subhadeep Pal, VP Finance, who is taking charge as CFO from 16th May, 2026. We have uploaded our investor debt and earnings press release on the stock exchanges and the company's website. I hope everybody had an opportunity to go through them. I would like to begin that the global geopolitical environment has disrupted supply chain. The situation has also resulted into volatility in foreign currency and commodity, resulting into cross pressures across both. However, we are happy to inform our investment in the last five years on backward integrated manufacturing setup is well-equipped to observe such supply chain disruption and improve our resilience to adapt to the situation. Our ability to quick turnaround resulted into addressing the surge in demand of small appliances better than their peers. We are already observing this transition, with rising adoption of induction cooktops and increasing traction in small electrical appliances, particularly rice cookers, kettle, OTGs, and air fryers, which are emerging as key growth drivers within the electric cooking segment. Iran war resulted in the surge in demand for induction cooktops and other small appliances. During the quarter, both small appliances and induction cooktops have contributed around 56% of our total revenue. This is mainly due to a higher adoption and penetration of these products by households. This will broaden the market of these categories and increase the market size base as it has moved from option to necessity. This quarter, induction cooktops contributed 15.5% of revenue and delivered strong momentum, with high value growth of 89.4% year-on-year and volume growth of 67.3% year-on-year. We understand that there was an unpacked market of Horeca, the hotel, restaurant, and cafe chain segment, which was dependent on LPG for cooking. Oreka segment has limited access to solutions suited to high volume, high wattage, and high intensity. So to address this segment, we launched the Pigeon Ignite 3500 Watt heavy-duty intra-red cooktop designed specifically for professional kitchens and commercial use case. The units, 3,500 watts, high-powered output. Enables faster heating and more efficient cooking cycles, and essential advantage in the high-pressure service environment. Built with a heavy-duty stainless steel body, the cooktop is engineered to withstand continuous use, aligning with the durability expectations of commercial setups. Going forward, demand for energy-efficient alternatives is expected to remain resilient as households increasingly prioritize reliable and affordable appliances. This trend is reflected in our small kitchen appliances segment, which contributed 40.2% of revenue and delivered Q4 value growth of 12.7% year-on-year and volume growth of 97.7% year-on-year. Further, the recent reduction in U.S. tariff on Indian goods from nearly 50% tariff to around 18% is expected to meaningfully improve export competitiveness and open more sustainable growth opportunities for the Indian kitchen appliance industry in global markets. In line with this, our OEM exports contributed contribution increased to 8.7% in quarter four, up from 3.8% in quarter three. On a weekly basis, OEM exports have delivered a character of 3.9%, supported by continued progress on key customer development. Moving forward, our channel mix. Q4FI26 were led by e-commerce at 34.3%, followed by general trade at 32.3%, modern retail at 11.3%, retail EPOs at 9%, OEM exports at 8.7%, and corporate sales at 4.8%. For FI26 e-commerce contribution, 35.9%, general trade, 29.7%, modern retail, 12.4%, OEM export, 10.7%, retail EPOs at 7.5%, and corporate sales at 3.8%. This evolution is increasing because organized channels are expanding both access and visibility for pigeon. Online platforms are helping us reach consumers beyond our traditional geographies, where good commerce is enabling faster deliveries and improving conversion, especially for urgent replacement needs and convenient purchases. Our consistent stock availability, reliable fulfillment, and strong customer feedback are strengthening trust and supporting repeat buying from our customers. I am also pleased to highlight our progress in Pigeon exclusive brand outlets. As Amtetika Smart 2026, we have grown to 329 stores across 151 cities and 22 states, with 67 net additions in the year, including 16 in Q4. We are firmly aligned with our goal of reaching 500 stores exclusively by the year of 2027. Alongside this, our flagship brand Tijon delivered a YTT CAGR of 11.6% with Q4 F526 CAGR at 16.7%, reinforcing its Pan-India leadership and strong consumer affinity. Now I will discuss Q4 F526 financial performance. The consolidated revenue stood at 414.5 crores for the quarter versus 313 crores in the previous year. A growth of 32.4% year on year basis. Gross profit for the quarter stood at 162.2 crores versus 120.8 crores in Q4 F525, a growth of 32.6% year on year. Gross margins for the current quarter stood at 38.6 in line personally in line with Q4 F525. EBITDA for Q4-FI26 stood at 39.5% versus 29.5% in Q4-FI25, showing a growth of 33.9% year-on-year. EBITDA margins for the current quarter stood at 9.5% versus 9.4% in Q4-FI25, improving by 113 basis points year-on-year. Pat for Q4-FI26 stood at 6.1 crores versus 1.4 crores in Q4-FI25, showing an exceptional growth of 317.8% year-on-year. The pat margins for the current quarter stood at 1.5%. Now I will discuss the Q4-FI26 financial performance. The consolidated revenue stood at 1,607.4 crores for FI26 versus 1,449.8 crores in FI25 and suggesting a growth of 10.9% year-on-year. Gross profit for FI26 stood at 622.5 crores versus 552.4 crores last year. Same time, same period, reducing a growth of 12.7% year-on-year. Gross profit margins stood at 38.7%, an increase of 164 basis points year-on-year basis. EBITDA for FI26 stood at 166.1 crore versus 150.7 crore in FI25, showing a growth of 10.3% year-on-year. EBITDA margins for FI26 stood at 10.3%. Profit of the tax FI26 stood at 42 crores versus 38.5 crores in FI25, showing a growth of 9.9%, 9.1% year-on-year, flat margins for the period stood at 2.6%. Now I would request the moderator to open the floor for questions and answers. Thank you.

Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking the questions. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Shreyans Jain from Swan Investments. Please go ahead.

Hello, sir, I have three questions. First is on the cash flow, sir. If I look at a cash flow statement, we've done a capex of about 111 odd crores. And I think in the Q3 call, we had mentioned that our capex was 63. So I'm just trying to understand Q4, we have spent about 48 odd crores. Can you help me understand what have we spent this on for Q4 as well as the whole year? Because you are going to understand that the last part of our capex we are done with.

So, what is reflecting on these numbers is what we have capitalized, what has been capitalized in the quarter. We will give you a list of all those capitalized items. Of course, the capex spend has come to a complete, I mean, the cycle is completed, but there are very few WIP items like our substation for electric power and one IKEA plant. Which is a total of WIPs.

About 70.

Yeah, yeah.

And see, in the cash flow, where you see the cash flow for investment is $150. 11 crores, but we also have taken some LCs and then we have gone with the long-term borrowing against these capex. So you should net off the capex investment with supplier's credit. So the net is the actual increase in the cash flow. The net is the actual cash flow for the capex.

So, sir, net I tried to do with last year's gross block, I did accumulated depreciation and this year's depreciation. So, the net addition comes to 35 crores and the amount here is 111. So, I'm just trying to understand is this fixed assets, lease liability, where are we spending this on? If you can just explain this in a little more detail.

I just said... You have to net the increase in the, or decrease in the supplier's credit. So, in the financing activity, in the financing activities, you have supplier's credit where it has positive of about 32 pros. You should net off that.

Maybe I'll take this offline. Sir, the second question is, obviously, we have repaired our debt, but if you look at the interest in other finance charges paid, that has increased from, say, 19 crores to 25 crores. Now, why should this happen?

Hello?

Can you hear me?

Hello. Hello, Shreyan, sir. We can hear you. Yes. We bring the headset a little bit closer.

Yeah. I'm saying, sir, during the year, we have repaid our debt. But if I look at our cash flow again, interest and other finance charges paid has increased from 19 odd crores to 25 odd crores. Now, even if I adjust the supplier's credit, I mean, I'm just trying to understand what is happening in this line item, because ideally you would expect interest and other financials to go down, right?

You see, interest and borrowings have come down, and the interest expense that is for supplier's credit, lease liability, lease and buyback financing, that has gone up.

We had one sale and leaseback transaction in the last quarter, and on that, the interest charges have gone up compared to the previous quarters, but the borrowing cost has come down.

Okay, and sir, one question on the P&L. Obviously, we've done well on the top line bid, but I'm just trying to understand, shouldn't we have benefited on the gross margins? Because ideally, I think in one of the calls, Mr. Gandhi had mentioned that we have taken price increases. So, but why why gross margins are flat? And on the same side, if I look at the OPEX, 50 crores of OPEX has gone to 73 odd crores, which is an increase of 41%. And I was given to understand that all our exports are FOB. So, a lot of the increase in freight and all that doesn't actually impact us. So, what is leading to this 41% increase in OPEC?

See, our retail sales has gone up from the like-to-like previous quarter or for the whole year. Is there some disturbance? No, I can hear you clearly.

Yeah.

So, because there is a sales commission that is

accounted for other expenses, Which is in line with the revenue growth.

And generally, the overall, otherwise, the growth for the quarter is about 30%. So also the relative cost of freight, provision for warranty and business promotion, power cost, all these things are growing in line with that revenue growth.

The sale has gone up compared to the previous year, same quarter, by 32%. My cost has gone up by only less than that increase, which means about a similar range, but it is in line with the sales increase. As Mr. Gandhi said, price, then warranty, then business promotion expenses, these are all increased in line with the sales increase.

Got it. And, sir, last question is, can you help us understand the value-volume split in small appliances? Volumes have grown by almost 100%, but overall value is just 13-odd percent. So, what is happening in this segment, sir?

Sir, you are telling there is a difference between volume growth and value growth?

So, for the quarter, small appliances' volumes have grown by almost 100%, but overall value growth is just 13%. So, what is actually happening in small appliances?

Yeah, so we will give you a complete breakup if required. So the different products are at different price points. There are higher contribution coming from lower ASB products in the quarter, and so you are seeing higher volumes of those products, and the next value growth is according to lower. Because the unit count of the sum of all the small appliances is what we give you in the presentation, but the value is absolute.

Got it. I'll follow that in the queue, sir. Thank you and all the best.

Thank you. The next question is from the line of Riyan Syed from 3Nitra Asset Managers. Please go ahead.

Yeah, good evening, and thanks for taking my question. Sir, I have a couple of questions. First, on your inventory side. Your inventory levels still remain relatively elevated despite working capital improvements. So, is this inventory being built intentionally ahead of anticipated growth, or are there certain categories where sell-through remain slower than expected this quarter?

Are you been discussing inventory?

Yeah, I am.

I think we have optimized on the inventory levels. This is the inventory of both our RM and finished goods. We are a manufacturing company. We have worked almost at equal level RM and inventory. Actually, our number of days of inventory has come down.

You may see the absolute value remain the same, but the number of the inventory days has come down.

Yeah, yeah, I am not, I am talking about the absolute inventory.

Absolute inventory, yes, to some extent, because the metal prices are increasing, we had stopped this... Aluminium. Yeah, aluminium and then steel in the last quarter.

Oh, okay. Got it. Sir, my second question is around your retail expansion. That is, your retail expansion has created meaningfully in F.26. So, at the current maturity level, are newly added stores dilutive or accretive to all the company margins in the first 12 to 18 months?

Can you repeat your question, sir? You would still not be able to follow.

Hello.

Yeah. Yeah, sir. My second question is around your retail expansion that you have done has accelerated meaningfully in FI 26. So, at the current majority level, are newly added stores dilute you accrued into overall company margins in the first 12-18 months?

Yeah, so if you will see, our average sales of the retail per store has gone up substantially from 3.8 lakhs to 4.4. So any incremental growth beyond 2.5 lakhs on an average is directly contributing to bottom line.

Okay. It's the last one, bookkeeping question. Could you please guide that what revenue, revenue, margin, growth are you targeting for next two to three years?

I think we would definitely want to protect that 11%, even we are currently at that level. There are one-off items like, particularly in the quarter, we had a huge surge in the forex loss, very volatile rupee, a depreciation of rupee. Otherwise, we are in line. And so with higher revenue growth, we definitely believe that EBITDA margins will be better than this. But we are very confident with the current trend and the demand for all the categories of our products. We will be able to protect that 11% and definitely go on this. On the growth front, we are seeing growth in all our channels and all our products. So, again, we are confident of getting back to the earlier growth rate. While the quarter was gone by, it was strong. Before the quarter, we had challenges with our export. Export is getting normalized with the normalization and additional revenue of IKEA coming this year and the growth on smaller appliances. We are very confident of an upwards of 15% growth this year.

Okay. Okay, sir. Thank you. That's it for my side and good luck for your coming quarter. Thank you.

Thank you. The next question is from the line of Anand Mudra from Soar Wealth. Please go ahead.

Hello. Good afternoon, sir. Congratulations on great results, especially on revenue and working capital side. And thanks for the detailed presentation also, which captures the reason for one-time expenses in the financials. Sir, wanted to understand about EBITDA margin. So, we have missed this year's guidance. What is your guidance for next year's EBITDA margin? 11%, you said. So, in spite of growing revenue by 15%, some operating leverage may play out and EBITDA margin may be higher than 11%.

Anansi, what we were suggesting is we are very confident of protecting the 11% and improving upon from here. We are also confident on the revenue growth, both driven by growth in smaller appliances, our export stabilizing, and also IKEA business commencing to start doing revenue in IKEA. So, all these three give us the confidence that we will grow at upwards of 15%, and any growth beyond that will be also positively contributing to increase in percentage of EBITDA.

Okay, understood. Sir, another thing, have we taken any price hike because rupee is depreciated substantially and we may have some higher probability this quarter?

We have covered the price height for commodities beginning of this quarter. We have accounted for that and passed down the price increase. And for our exports, there has been a little delay, but from starting from 1st of June, all our customers have agreed to the increase that we have asked for. And so with that, we are confident of this margin.

Okay, sir. Sir, my another question with respect to capacity of industrial cooktop, what is our capacity, sir, in terms of number of units, and how much you want to, are you planning to increase that?

We were around 2 million pieces last year. The current run rate will be between 4 and 5 million, but we are adding some more with our additional lines also being set up at our plant in Badri, apart from Bangalore. So we should be on the lower side between 4 to 5 million, and if we are able to manufacture more with the demand being very high, it could be higher.

So, last year, we were having capacity of 2 million?

Yeah, we produced 2 million.

Okay, and this year, what is your guidance, sir, or what is your capacity?

Current rent rate, we will hit between 4 to 5 million.

So, you want to double the production?

We have already doubled the production, but the demand continues to be higher than our capability to produce and overall manage the supply chain. And if we are able to improve on our production capacity, we see a market which is growing very fast, and we are confident to be in a leadership position in this. We are well equipped compared to our peers on this. Okay.

And sir, with respect to CapEx, because since you are doubling the capacity, there would be some CapEx for this financial year too? Other than maintenance?

No, this is, we have the capacity. It is more of some small assembly line and allocating more resources towards this product. It's not a meaningful capacity. It's a very small assembly line, testing lines, and all that.

Okay. And sir, what is the guidance for this year capex that will be cash outflow from the balance sheet, from the cash flow statement I am saying?

Yeah, that I think is well within our plan. It is around 40% including our retail. I mean overall capex for this year will be around the 40%.

Okay. And sir, when is the Ikea, billing to Ikea will start?

This quarter.

Q1 of this year, ok. Thank you sir. Thanks a lot.

Thank you. The next question is from the line of Vinod Krishna from Evendus Bell. Please go ahead.

Sir, am I audible, sir? So, thank you for the opportunity. So, my question is, now that we have done our capexes almost at the end, and we have added IKEA, we are also expanding our footprint across the globe, and also having a tailwind in our kitchen appliances because of whatever is happening, and so don't we, like, I'm not asking for particular number guidance, but don't you think our growth should be better than what we have done over the last five years, in the next two to three years? We are confident on higher growth, sir. More than 15%. I am not saying give me exactly, it is not a commitment, but even the factors that you already have, IKEA exports and also tailwinds in the domestic, can we assume better growth than last 15% that we did in the last 5 years?

So, I will tell you, the last quarter we grew in the range of 30%, and current demand continues to be at the same level. So, we are confident of the higher growth now.

So, sir, second question, can we assume the working capital is the same, can we maintain or is it a one-off because of the index inventory moving very fast because of Iran or we can maintain current level of working capital around 30 days or it is too optimistic? What should be the working capital assumption, sir?

We are confident of keeping it below 30 days.

Sir, the last question, so what will be the drivers, so last two questions are in e-commerce, because our 30-35% sales come into e-commerce, are we seeing more competition in e-commerce because it is easier to distribute instead of having presence across retail outlets, general trade, retail trade, are we seeing more competition and how are we positioning ourselves for, because large part of our sales is coming from e-commerce, so to really build a brand and what are we doing, sir, because that, because they're not going to be able to do it. There, it is easy to compete, right? You can outsource and put a brand. You don't need to be present across the cities and towns and GT and MT. You can't need retail. You need not be. So, can you explain more the dynamics of the e-commerce business, sir, if you don't mind?

In both the small appliances category and the cookware category, we are leaders on both the large platforms in this country already.

So, you are not seeing a difference?

It is a combination of too many factors. It is not only about sourcing and selling. Our capability to make, innovate, bring the product to the consumer at the right price point, make it available in large numbers when it is required, having a service network across the country, the brand connect with the customer. I think all of these matters work, and that's why we are leaders there.

Thank you, sir. If you can, in the presentation, put the market shares in at least where you think it is not moving, it is more stable, like in pressure cookers, in the at least categories where you are sure that the market shares don't change too much. If you can put it in the presentation, it will be helpful, sir. That is one request. And second is, what are the drivers of margin growth in the next two to three years? I'm not asking for next one year, but where be? Because we have done the capex, most of the thing is behind us. So, what are the drivers of our margin expenses? Just sales growth or because? And at peak of our manufacturing capacity, what would be our field, sir, and how far we are away from that field?

So, you answered it yourself. As we scale up, I mean, harness the capacity that we have built, the cost gets rationalized and the unit cost gets improved with all the backward integration that we have and with higher production, I mean, efficiency in production, definitely this becomes a margin driver. With higher revenue growth, definitely the cost between the cost of the product and the realization also goes up, and the overall corporate cost will proportionately come down. All these are budget drivers. As we grow from here, we can definitely see improvement on our EBITDA margin.

So, at peak capacity, what would be our sales, sir? If you can, no, I agree.

Between 2500 to 3000 with the existing facility, we are very confident to get there.

And it would come in the next two years mostly, because if you assume a 15-20% growth.

We wish we grow at the current pace that we are growing. The last quarter we have grown at 30%.

Got it. So, we will go there in two years. Okay. Sir, and all the best, sir. Thank you very much for the opportunity.

Thank you. Thank you. The next question is from the line of Nele Parikh from POPHT Ventures. Please go ahead.

Good evening, sir.

Have I heard one? Yeah, yeah.

Okay, so wanted to have some more information on the export side. Can you just provide this revenue mix of the domestic and the export?

So our exports were growing. We did have a disruption because of tariffs. Those tariffs now today are in line with the Southeast Asian countries, and we are a preferred supplier with our existing customers. And additionally, with the growth of the IKEA business, our export contribution, which in the earliest years used to be around 12%, will grow from there. The setback in the early part of this year is the reason for lower contribution from exports, but we will get back to higher of 12%, and actually our exports in terms of growth will be little higher than the company's growth rate. But we are also very confident of strong domestic growth driven by both small appliances and the pressure cooker. Our pressure cooker segment is growing by volume, and there is a lot of movement from aluminum to stainless steel, so by value terms it is also growing. So between pressure cooker and small appliances and export, we see growth coming from all these three segments.

Sure, sir. Just a quick add-on. Can you just please provide this export number contribution in Q4, F526? Just from the numbers perspective.

Yeah, it will be about 8.7 percent, okay? Q4 export number. It's about 8.7% for the Q4, sir, and 11% for the whole year.

Okay, sir. Thanks a lot. Have a nice one. Thank you.

Thank you. The next question is from the line of Raghav Maheshwari from Kamayaka Wealth Management. Please go ahead.

Hi, thanks for the question, Peter. First of all, I just wanted to understand, since you mentioned that from Q1 onwards, revenue from IKEA will be built, so is it fair to assume that the plant is live and we have capitalized all the costs, or are we still yet to capitalize some costs?

We have capitalized it now, in the first quarter. We have capitalized all, but last quarter. All of IKEA's, the investment in that client has been capitalized as of 31st March.

Okay, sir. And sir, what kind of revenue are we looking for from this IKEA deal?

I think this is a progressive growth. We have invested for the future. It will be, we have three line of products already that has been awarded to us. The first line will start production and revenue recognition in the company from this quarter. And maybe by the third quarter, the second line, and by the fourth quarter, the third line. So maybe before the end of this year, we are between 40-50 crores. But at a full year of this, at a full capacity utilization of these three lines, we'll be around 200 to, between 200 and 250 crores.

On the system that helps. I think my next question is on the line of our retail stores. We are moving from the Kofo model to the Kofo model and the Kofo model, P-O-S-O. In which model are we more aggressive? Are we considering franchisee owned, franchisee operated more?

So, as a strategy, when we started to build our retail, we wanted to have a complete control on the experience of the stores, the way it is working, and understand the whole thing. The future stores are all POFO or COFO, including the existing POFO stores in the next two, I believe in the next two years, majority of all these stores will be franchisee operated, Either it is POFO or COFO. We would want entrepreneurs to manage these stores. There is a good pipeline of franchises who are interested in taking up these existing stores also. We are working on that. I mean, the future of our retail is that it will be managed by entrepreneurs.

Understood, sir. And for such aggressive expansion of franchisees, can you guide me through your sales growth percentage for not the new stores, for the mature stores?

At the moment, particularly if you will want to only compare the last quarter, it has been very strong. It is in the range of 25%, even the same store growth.

So, this we are talking about the mature stores, right?

Yes.

Okay, so mature stores are dreaming like two years old?

No, that may not be the benchmark. I said the last quarter has been very strong. Store-to-store growth is in between 25 to 30 percent.

Twenty-three to thirty percent. I just wanted a bifurcation between newer stores and getting more revenue in the first month.

Yeah, for us, we believe any store which is crossing that two years of operation, majority of those stores are bridging the five lives.

Understood, sir. Understood. And, sir, last question from my side, sir, in this FOFO and FOFO model of franchisee in which we are targeting, who books the inventory, will the inventory be on your list or the franchisee owners list?

Yeah, all the inventory belongs to the company, and it is funded by deposits that we will take from the franchises, if these are franchisee-operated stores.

And what kind of loyalty arrangement do you have with them?

Come back.

What kind of royalty arrangement do you have with them?

For the franchise, 2 lakhs is a fixed franchise fee that he pays. And otherwise, based on the arrangement between a 4.44, he gets between 15 to 30% margin.

Understood, understood.

That's all from my side.

Thank you so much, and you'll be the best of luck.

Thank you. A reminder to all the participants, please restrict yourself to two questions. The next question comes from the line of Madhur Rati from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity. Sir, I wanted to understand how much gross margin improvement can we expect with economies of scale going forward maybe over the next two to three years?

We are targeting to improve by 1% every year, and we believe that within the 2-3 years, we should hit a 42%.

Right. Sir, so on a 2500 to 3000 crore revenue base also, we are expecting a 40 to 43% gross margin. Is that understanding correct?

Yeah, so as we grow from here, definitely we are also working on our margin improvement. So we believe we will be able to improve by 1% year on year.

Right. Um, I'm sure I wanted to understand, um, you meant... Sorry for interrupting. Mr. Rati, please be louder. We can't hear you. Mr. Rati, you are not audible.

The line has got disconnected. I'll take the next participant. The next question is from the line of Reshim Mehta from GreenEdge Wealth. Please go ahead.

Thank you. Sir, so, you know, a few questions on the balance sheet. If we look at the working capital, it has improved substantially in, you know, in FY26. So what really has helped reduce, you know, our inventory and debtor days? I think they've reduced by eight days each. And also, simultaneously, creditor days have increased. So if you could just, you know, explain the reduction in overall working capital.

Yeah, so for receables, we are working with channel financing partners to realize the money earlier than the due dates. And then for payables, we are working with payable finance partners, where we, while we pay the vendors on time, so we get an extended credit from these partners. And then for inventory, we have a closed watch on the utilization and then we keep the inventory for the required, I mean, whatever is required for production. And then we have good controls on the inventory so that we are trying to reduce it, reduce the inventory and then the number of days.

So typically, for, you know, raw materials like steel and aluminum, you know, what is the inventory that we typically keep for them? And considering the inflationary trend we are seeing there, what kind of, you know, have we done?

So, for the raw materials, we keep around 60 days of sales. So, especially aluminum and then steel, Around 45 to 60 days.

And currently, in the current scenario, are we increasing that from, let's say, 60 days?

Yeah, for the last quarter, because they're expecting the increase in the metal prices, we have had taken high volumes and then kept the materials. So it is an advantage for us so that we got at the lesser price than the market price.

So, with this, where do we see our working capital at, you know, sustainable levels? What would be those levels?

Yeah, with all that, we were able to reduce it. So, in fact, while the inventory is at the same level in absolute value compared to the previous year, still we have to reduce the number of days.

Right, and you think that is sustainable, right? Like around at 70?

Yeah, yeah, it is sustainable. You are right, you are right.

And, you know, the right of use assets, this number has reduced substantially from 160 crores in FY25 to 62 crores in FY26. So, what led to this reduction?

See, in last quarter, we have reduced the useful life of the retail store. So, initially, we used to capitalize for nine years. So, because we started these details just about two and a half years ago, so we have, I mean, we have the trend established, and then we have reduced this useful life from nine years to three years. That's why the assets and liability has come down both, I mean, equally.

Okay. Okay. And, you know, if you could just talk about the demand and, you know, where we are seeing that buoyancy. Of course, point taken, sir, in your opening remarks in terms of induction cooktops and OTGs and things like that, but any specific areas? Are we also seeing, you know, the buoyancy because of the GST rate cuts that had happened some time ago? So just your thoughts on, you know, how the demand has shaped up and how it is expected to move, you know, going forward and any specific regions or sub-segments apart from induction cooktops and electrical appliances that you would like to highlight?

You know, primarily, these are the three categories of products for us, cooktop, appliances, and cookware. Cookware, substantially, is contributed by pressure cooker, and the cookware is coming from our exports. In all these three segments, we continue to see very positive growth. Of course, the small appliance is growing faster. Pressure cooker segment is growing both in terms of volume, and also because of the premiumization that is going from aluminum to stainless steel, The value growth is also substantial. In the last quarter, you will see that we had very high growth. In value terms, 44% coming from pressure cookware. And because we had a reasonably good export, we had a 49% growth in even in our non-stick cookware. The small appliances category, apart from induction, is also growing. But the induction at the moment is growing disproportionately. But this is also getting into adaptation now. Most of the households are wanting to use induction cooktops. They would have started using it based on those emergency needs, but now people want to use. We are seeing this kind of trend, and we believe this will continue for a long time. India being a very large country, not too much of capacity in the country. We are positioned in a better position to peers, so all this will lead to higher growth than industry for us, But the industry will also continue to grow.

So, on the induction cooktop side, if I'm not wrong, a bulk of the raw materials is imported from China. So, because of the supply chain disruptions that we are seeing and, you know, overall induction demand surge for this category, are we facing any challenges in terms of, you know, sourcing the underlying raw materials for induction cooktop?

Again, as I mentioned, we are better positioned in this. We manufacture, it's a highly backward integrated facility for manufacturing induction cooktops. It's not that all of these components we import. All those facilities that are available domestically, we use them. Either we manufacture them ourselves or also source them. Example, to give you one small example, we make our own PCBs, but we get the PCB board from the domestic manufacturers. It is only the components that we import. A typical assembler would want to import the whole population. The cost difference between these two, the capacity that will be available from the suppliers in China, may not be adequate enough to address the surge in demand. Of course, there is one particular input, that is the crystalline glass. Today, at the moment, in this country, we do not have any capacity. So, between 33 and 40% of the input is imported, based on the type of model that we make. Yes, that remains. But we have a very strong capability of sourcing, procuring these items from China. We have a very strong team on the roles of the company working in China also.

Sure. Thank you.

Thank you. The next question is from the line of Anubhav Goel from Cosmo Ventures. Please go ahead.

Yeah, hi, sir. Congratulations on a great set of numbers, especially the cash flows front. Sir, we are a mass value brand, and 60 to 70% of the cost of an induction cooktop for industry is still imported. I think there are three components, PCB, glass, and induction coils. First of all, I think I heard your comments for PCB and glass. So, what about this induction coil?

Hey, Karsal. There's enough of wire available in the country, and then there's a plastic part. Of course, we import the magnets.

Okay, okay, okay. So, sir, wouldn't gross margins take a hit for the next one to quarters? Like we have steel prices increasing, aluminum prices increasing, the forex movement is not favorable. So, at least temporarily for a few quarters, we should see a hit on margin, right?

No, we will definitely pass on any commodity price increase. Generally, we have an arrangement with our suppliers for a quarter, and the average of the previous quarter is what we have an arrangement for, for all our numbers. But we definitely see a challenge on addressing the forex disruption. That could be a challenge, but otherwise, on any input cost increase due to commodity, we will pass on.

Can you quantify the price we might have taken so far?

For the current quarter, we are in the range of 10%.

10%, okay. Okay, okay, okay. And, sir, coming to Exports, I think before tariffs came in picture, we were very, very positive on growth even beyond IKEA. So, you feel that potential business we were eyeing will take some time to come back once clients have proper parity on tariffs?

It started coming back.

So, sir, we should pencil in some gradual growth for this year?

Yeah, so definitely there will be good growth and it will be gradual.

Got it. And so my last question is, we see many new brands and entrants coming in the market. You know, maybe they are at about 50 crore sales or 100 crore sales. Do we have any thoughts to acquire a mass premium or a premium brand and try leveraging our manufacturing and distribution set up to play?

We don't want to evaluate any such opportunity, but there is enough room for us to grow with the facility and capability that we have built, both in the channels and the manufacturing capacities. But we will not say if there is any good opportunity that can add value to our business.

Okay. Best of luck. Thank you so much.

Thank you. The next question is from the line of Anand Mudra from Sour Wealth. Please go ahead.

Sir, just wanted to understand about other expenses. In quarter, four hours, other expenses have gone up to 62 crore. This is very high. So, wanted to understand, is there any one-off item in this, sir?

There is no one-off item per se, but I will tell you, substantially, of the large number, about 10 crores, is increased in sales commission. The sales commission is a commission that we pay to our franchisees stores.

Okay.

Because there is a huge surge in the revenue number itself for retail, that's where you see that higher. Otherwise, it is in line with our revenue growth. Example, I will give you. If it was 5.5 crores of rate and forwarding last year, this year it is 6.15 crores. Similarly, provision for warranty, if it was 1.25 crores, it is 1.75 crores this year. Business promotion would have moved from 48 crores to 54 crores. So it is in line with power and fuel, say, from 15 crores has gone to 20 crores. It is in line with revenue, correct?

So, sir, effectively, our revenue from our own stores have increased in quarter 4 as compared to the whole year. Yeah. Hence, the commission has gone up, correct?

Yes, yes.

So, our gross margin is impacted much more because gross margin from the direct store is much higher.

So, currently, our revenue from retail stores is in the range of 9%.

Okay, and Q4, it was higher, sir?

In the same range, for overall revenue was also higher.

Okay. Understood, sir. Sir, one more thing. I checked a few conference call of last year. We have guided for 50 crore of capex, including the IKEA capex. But as per cash flow statement, we ended up spending 111 crores. So, this year our guidance is 50 crore. Do you think we may end up spending more or do you think 50 is more or less we are there?

Sir, in the cash flow, the capex investment is coming. 109 is actual. It's an indirect cash flow. So, whatever is capitalized in the PPA schedule is reflecting there. But it is funded by the banks, by way of supplier's credit. So my actual cash out is the net of the decrease in supplier's credit.

And what is the actual outflow, actual net outflow?

It would be around 70 to 75 crores.

Okay. You want an exact number to share it with you. I understood, sir.

Just a clarification, sir. Till that time. It is funded by supplier freight. It will, it will not come in cash flow statement as CapEx. It will come when it will, okay, understood.

It will not be a real cash flow. Only when we pay the liability to the bank, it reflects in the cash flow.

Understood. Actual cash flow was 70 crore last year.

Yeah, net cash out for CapEx would be about 70-25 crore.

And sir, since other expenses have gone up substantially, coming back to the same question, other expenses have gone up substantially in Q4, what shall we budget for financial year 27 as a whole other expenses, as a percentage of sales?

As a percentage of sales it remains the same.

So, it is impossible to come down, being the revenue is growing up, but the other expenses will not go in the same increase where the revenue grows. So, if the revenue obviously it will be less than the current year's percentage.

Okay. Understood. Thanks. Thanks a lot.

Thank you. The next question is from the line of Vinod Krishna from Amundus Wealth. Please go ahead.

Sir, you mentioned that in my previous question that you are a leader in e-commerce. So, any market shares can you give on pressure cookers, induction, wherever you can clearly say that we are leaders in whichever items. If you can name the item on the market share.

So, if you mention these two products, definitely by volume, we are far ahead of computation both on induction cooktops and pressure cookers.

On the e-commerce platforms, you do not, and overall also you do not want to share the exact numbers, sir, that's the, you know,

there are different category of products, different, see, in different product segment, particularly since you mentioned induction cooktop and pressure cookers, we are far, I mean, definitely far ahead in volume by any competition on both these platforms.

Sir, on any target of retail expansion over the next three years, sir, this year will be 500, or the next three more years.

No, sir, we are working at the trend rate of 25 stores every quarter, more or less. That will continue.

Thank you, sir. All the best, sir.

Thank you. The next question is from the line of Madhur Rati from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity on the answer. How would be a margin excluding the induction segment? So, I am trying to understand what would be the margin for induction. Would it be near company average or higher or lower?

So, for us, other than the export business, which is white label, at the gross margin level, we are agnostic on channel or product or category.

Okay. And, sir, I wanted to understand we have invested over 500 crores in CAPEX over the past five years, but that hasn't reflected in our revenue. If I consider FI 22 to 26, hardly 400 crore revenue increase. So, where we struggled, and, sir, going forward, how should I look at our capital allocation policy?

So, there is no struggle. The CAPEX is for a long term. And we have moved from $800 to revenue to $1,600, but the capex is designed for $3,000, so the growth is from $800 to $3,000.

Right. So, what kind of payback period do we expect before embarking on?

Generally, we believe that whatever we invest, we should get back in maximum three years.

Right, and so, so, we haven't, so, so, so, if I, even, if I consider our PBT, there, the PBT that we did in the past five years, doesn't, like. So, if I consider the payback versus the PBT, incremental PBT that we have delivered in the past four years, it doesn't match up for the three-year payback.

So, this is not for the five-year period. These investments have happened progressively in the last four years, and this is also for the future. It is not for the period that has gone by. The investment, whenever we do an investment, if it does not give us returns in three years, we will not pursue that investment.

Right. And sir, with this IKEA business scaling up, what can be the quantum of this business maybe in the next one or two years?

The current line of items that have been awarded to us and at its full capacity will be between 200 to 250 crores.

Okay, sir, sir, that was from mine. Thank you so much and all the good.

Thank you. The next question is from the line of Lakshmi Narayan from Tunga Investments. Please go ahead.

Thank you. I was just looking for the channel mix of states. Has it been given already because I joined the call a little late? I'll pick it up.

Sorry?

Yeah, I need to understand the channel mix of the sales in terms of modern trade, your own channel, e-commerce. For the quarter or for the year? For the full year.

Okay. We are at 29.7% for GT, 35.9% on e-comm, 12.4% for modern trade, 3.8% is corporate sales, our EBO sales is at 7.5%, and our exports is at 10.7%.

And I see that we sell products on various combo offers, right? So, what percentage of our sales come from combo offers is something which you track? Is that a better way to say that?

No, we do annual combo sales during the December period, and the overall sales is about between 5% to 6% of our annual sales.

Got it. And your working capital has actually gone through a tremendous improvement. What led to this improvement and how sustainable is this?

So, we have worked on both our receivables and payables and the inventory. The receivables now are all fully, majority of all that are covered by general financing. So, we have some cash discount policy for our customers that funds their cost of paying us. So, most of the time, it is much ahead of the normal payment period. Majority of all our payments we receive within 15 days. And on payable side, we are on invoice platform. This is a platform which facilitates payment to MSMEs, wherein while the maximum credit period to MSMEs is 45 days, we pay them in 90 days, but they get the payment upfront immediately. And because they get this money immediately, they fund the cost of this financing. For us, while we pay them in 90 days, the payment is received by our suppliers almost immediately. And on the inventory, while we maintain the same level of inventory, as our revenue is going up, the inventory to the number of days is coming down. All these three are contributing to our better cash flow by number of days. We believe this is a sustainable model. We have worked for this, and in that range between the 24 to 30, we are definitely confident of being there. This also is accounting for some inventory that we sometimes as a strategy build. Like in the last quarter, we had to build inventory on aluminum because of it.

Thank you. And in terms of your total, you know, in-house manufacturing versus outsource, how this has actually panned out over the year in compared to the last year?

No, we almost have moved to, I mean, Good morning, everyone. We are between 97% and 98% of all in-house manufacturing.

Got it. And in terms of, you know, good sales in Q4, you know, when you started the Q4, did you anticipate such a good increase or how much was actually driven by the induction? I mean, if you remove the induction part, how much of that you actually anticipated and you actually could actually manage such a good sale?

Okay, let me put it like this. The induction sales started on the 10th of March. So, yeah, of the 90 days, 70 days has elapsed. We are seeing growth in across the categories. Of course, there was a sudden spurt in all the sales of induction, but we were growing on the induction category. As a category, even before this high spurt in demand, we were growing.

And do you see this, anything that led to this spurt in demand other than, you know, your own sales engine and the marketing engine, anything, any other factor that actually contributed to…

We believe post the GST reduction to 5%, we are continuously seeing across the categories good demand in our products. So even those products which were not falling in the category, I mean, the bracket of 5%, but post the GST reduction announcement that was in the middle of third quarter, seeing continuous growth.

Sorry, you know, because, you know, I mean, just wondering if a person would go and buy a cookware or a utensil or something because of GST cut, is that? I mean, just trying to understand how GST.

Okay, let me try to explain to you. This becomes a very strong play for any organized player. At 5%, there is almost no impact of GST on the product. Between 18 and 5, there is a huge difference. There is a lot of challenge for any unorganized player then. In our opinion, a lot of that sale is also coming to players like Stowcraft, who are very aggressive. See, they are also addressing a very price-conscious, very cost-conscious customer. By design, the brand is designed to address them. So, it definitely impacts. It does not mean that it will have no impact at all.

Got it. And do you think this is actually, this is faced by other manufacturers also, all your peers, this kind of a pertinent demand?

On the induction years, across board, those who are serious players in the induction cooktop category, those who are stranded with inventory that they could not be quitted, all that saw very, I mean, consumption, and so there is a pipeline that is completely empty, even if demand stabilizes, normalizes, there is a pipeline that has to be completely filled in. So for a near term, even if there is, assuming there is no adaptation of these products, still there is demand. But in our opinion, the consumers are now wanting to have this appliance as a regular daily use cooktop. And with that, we see that there is an opportunity of a very large growth.

Thank you for answering my questions.

Thank you. In the interest of time, that was the last question for the day. I now hand the conference over to Mr. Rajinder Gandhi, Managing Director from Stoecraft Limited, for closing comments.

Thank you. We hope we could answer your queries. But in case you have any further clarifications and any queries, you may write to us or reach out to our investor relationship advisors. And thank you for this evening.

On behalf of Storecraft Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.