Stove Kraft Limited: A Deep Dive into Q2 & H1 FY26 Performance

Stove Kraft Limited, a prominent player in India's kitchen appliance sector, has delivered a robust performance for the second quarter and first half of fiscal year 2026. The company's latest earnings report highlights significant growth, driven by buoyant consumer demand and strategic operational efficiencies. For Q2 FY26, Stove Kraft reported a consolidated revenue of INR 474.4 crore, marking a 13.4% year-on-year growth. This strong top-line expansion translated into a healthy EBITDA of INR 56.8 crore, an increase of 15.8% YoY, with EBITDA margins standing at 12%. Profit After Tax (PAT) also saw a substantial jump of 27.8% YoY, reaching INR 21.4 crore, reflecting improved operational leverage and profitability.

The first half of FY26 also showcased a commendable performance, with consolidated revenue touching INR 814.5 crore, an 11.2% increase over H1 FY25. Gross profit for H1 FY26 stood at INR 313.1 crore, growing by 11.9% YoY, with gross profit margins maintaining stability at 38.4%. The company's PAT for H1 FY26 was INR 31.8 crore, a significant 27.6% rise from the previous year, underscoring consistent financial discipline and market traction.

Strategic Initiatives and Market Dynamics

Stove Kraft's growth is not merely incidental; it is a result of well-thought-out strategic initiatives and favorable market tailwinds. The Indian economy's rapid growth, fueled by rising domestic consumption and a strong manufacturing push, has created an opportune environment for the home and small kitchen appliances sector. The increasing adoption of modern, energy-efficient, and aesthetically appealing kitchen solutions is a key trend the company is capitalizing on.

A significant boost came from the GST rate rationalization, which saw rates for approximately 35% of Stove Kraft's portfolio, including pressure cookers and cookware, reduced from 12% to 5%. This move is expected to enhance affordability and drive long-term volume growth in these crucial categories. The company, however, did experience some sluggishness in demand during Q2 due to the interim period between the GST announcement and implementation, leading to an estimated sales shortfall of INR 15-20 crore.

Expanding Retail Footprint and Global Partnerships

Stove Kraft is aggressively expanding its exclusive retail channel. The company successfully added 300 standalone Pigeon exclusive outlets by October 2025 and aims to reach 500 stores by 2027. This expansion, particularly targeting North and West India, is designed to strengthen brand presence and enhance profitability. The company is opening 25 to 30 stores every quarter, primarily under a COFO (Company Owned, Franchisee Operated) model, which helps manage capital expenditure while ensuring market penetration. The average sales per store currently stand at INR 3.81 lakh per month, with a target to reach INR 60 lakh per store per annum.

In the export market, Stove Kraft is forging significant global partnerships. The IKEA partnership, commencing in FY26, focuses on ceramic cookware, aligning with global standards. While meaningful revenue from this collaboration is anticipated from FY27, it signifies a strategic move towards diversifying export markets beyond the U.S. The company is also investing in new product development, including outdoor cooking categories and a new cast iron foundry, to enhance its export portfolio. However, the export growth, initially guided at 50%, faces potential dampening due to instability in tariffs, which management hopes will rationalize soon.

Financial Health and Future Outlook

Stove Kraft's financial health is on an upward trajectory. The company's ROCE (Return on Capital Employed) sequentially improved to 15.5% in Q2 FY26, and ROE (Return on Equity) reached 10.1%. Management is focused on further enhancing these ratios, targeting closer to 20%. A notable achievement is the significant reduction in borrowings during Q2 FY26, driven by improved working capital management. The company aims to become debt-free within the next four quarters, reflecting disciplined capital allocation and strong cash generation from operations.

Despite rising aluminum prices, management is confident in maintaining gross margins, expecting them to reach 39% for the remaining half of FY26 and be slightly below that for the full year. This confidence stems from their cost-plus pricing model, which allows them to pass on input cost increases to consumers. The post-Diwali sales momentum has been exceptionally strong, indicating robust consumer sentiment and demand. Stove Kraft's strategic clarity, disciplined execution, and focus on both domestic expansion and global partnerships position it well for sustained growth in the evolving kitchen appliance market.