08 Nov , 2021 By : Kanchan Joshi
Shares of Stove Kraft have delivered multibagger return this year so far as the stock has surged over 133% in 2021 (year-to-date or YTD), whereas, the multibagger stock is up over 110% in six months alone. Stove Kraft Ltd (SKL) is engaged in the business of manufacturing & selling Kitchen & Home appliances products.
Stove Kraft Ltd reported 2QFY22 revenue growth of 53% year-on-year (YoY), driven by growth across all channels – general trade, modern retail and e-commerce. "SKL has grown faster than competition in the last 7 years. Although gross margin is lower than competitors, EBITDA margin is comparable with peers. It enjoys industry-best working capital profile, which is likely to improve further," said Nirmal Bang in a note. The brokerage has maintained its Buy rating on the stock with a revised target price of Rs1,200 per share.
Distribution expansion will be a key catalyst for growth going forward, particularly in Western/Northern regions, as per Nirmal Bang. In 1HFY22, the company has added over 11,400 retail outlets. Moreover, new SKUs in LED Lighting/Plastic Storage containers/Electric Kettle will continue to aid overall growth going forward, the brokerage believes.
Stove Kraft's management stated that it is possible to clock ~20- 25% volume growth going forward and margin would be normalized at ~13-14% going forward. Analysts continue to believe that SKL can outperform the industry growth going forward, driven by distribution expansion, new product launches and exports.
Another brokerage Angel One is also bullish on the stock and has a target price of Rs1,288 apiece on the stock as it expects SKL to report healthy top-line & bottom-line growth on the back of new product launches, strong brand name and wide distribution network.
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