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Stove Kraft IPO : Kitchen Appliance Leader’s GMP and Other Details

Stove Kraft is a kitchen appliance supplier company. It started its business activities in 1994. It is the largest business player in its segment. Stove Kraft has a number of famous subsidiary products under its purview. The most famous brands are Pigeon and Gilima. Another famous brand name is Black + Decker. The company has more than 665 products under its portfolio of products. It has more than 2000 employees. The company has an international brand image with more than 36 countries across the globe. Stove Kraft is well diversified with its chain of dealers across India. More than 34000 people are included in that channel.

If looked in detail the Pigeon brand has 651 domestic dealers and more than 16 export dealers. Also the brand is spread across 27 states and 5 union territories. Under Gilima the company has 66 stores which are geographically set across 4 states and 29 cities. The major countries dealt by the company are USA, Kenya, Qatar, Mexico, Fiji, Sri Lanka, Kuwait etc.

The company has also begun its manufacturing units for Pigeon LED products. The company has its plants for manufacturing in Bangalore and Himachal Pradesh. The production of stoves, cooker lids etc.is carried out in Himachal Pradesh. The products under brand name Gilima and Pigeon are produced at the Bangalore facility.

Tabular Bifurcation of Key Details

IPO OPENING DATE	25th Jan, 2021
IPO CLOSING DATE	28th Jan, 2021
ISSUE TYPE	Book built issue
Face Value per share	10 Rs. Per share
IPO price band	384 Rs. – 385 Rs.
LOT SIZE	38 shares
MINIMUM ORDER QUANTITY	38 shares
ISSUE SIZE	412.63 crore Rs.
OFFER FOR SALE	317.63 crore Rs.
FRESH ISSUE	95 crore Rs.
LISTING AT	BSE, NSE
LISTING DATE	5th Feb, 2021

Key Highlights for the IPO

The IPO is set to be launched on 25th January. The company issue size is 412.3 crore Rs. Out of the entire issue 317.63 crore Rs. is allotted to OFS (offer for sale) and 95 crore Rs. is allotted to Fresh Issue. The company is going to get listed at both the stock exchanges. The listing date is set at 5th February, 2021. The lot size is 38 shares and maximum lots allowed are 13 per individual. The IPO will follow book built issue methodology and per share Face value is Rs. 10.

Dates to Be Noted

IPO OPENING DATE	25th Jan, 2021
IPO CLOSING DATE	28th Jan, 2021
IPO ALLOTMENT DATE	2nd Feb, 2021
REFUNDS	3rd Feb, 2021
DEMAT A/C CREDITED ON	4th Feb, 2021
IPO LISTING DATE	5th Feb, 2021

The IPO opens for subscription on 25th January, 2021. The last date for subscription is 28th January, 2021. The IPO allotment is to be announced on 2nd February, 2021. The Refunds would be initiated tentatively on 3rd February. Shares are planned to be credited in the selected account holder’s DEMAT A/c on 4th February, 2021. The IPO is planned to get listed on both the exchanges namely BSE and NSE on 5th February, 2021.

Lot Size Details and Class of Investors

The minimum lot size is approximately 38 shares per lot. The amount pertaining to this lot is 14630 Rs. The maximum lot size that a person could apply for is 494 shares. The amount for such allotment is 190190 RS. Hence the shares holding per lot size may vary from 38 shares per lot to maximum holding for 494 shares which amount to 13 lots.

The bifurcation of shares among different investor class is as follows :

ANCHOR INVESTORS	185.68 crore Rs.
QIB	123.79 crore Rs.
NII	61.89 crore Rs.
RII	41.26 crore Rs.
TOTAL	412.63 crore Rs.

The date for the anchor list is 22nd January and the shareholding for them is planned at 185.68 crore Rs. The QIB holding is 123.79 crore Rs and the NII has a share allotment ratio for the amount of 61.89 crore RS. There will get a total of 41.26 crore Rs worth shares for allotment. In all the issue size is planned at 412.63 crore Rs. out of which 35% is allocated for retail investors.

Information on Promoter Holding and Lead Managers

The promoters of the company are Ranjendra Gandhi and Sunita Rajendra Gandhi. The promoter holding pre IPO launch is nearly 61.31%.

The lead managers for the firm are :

Edelweiss Financial Services Pvt. Ltd.
JM Financial Consultants Pvt. Ltd.

The company’s registrar is Kfintech Pvt. Ltd. the company is also known as Karvy FIntech Private Limited.

Grey Market Premium

As per Kostak the company is accounted for a premium ranging around 30%. This accounts to roughly 100 Rs. per share. Although looking at the current market situation and the events aligned forward the exact premium price cannot be guessed. However there are 3 IPOs that are going to be listed before Stove Kraft, namely IFRC, Indigo Paints and HFFC. Hence the approximate premium can be known after the launch of these IPOs only. The reason is if the premium account to these IPOs goes as planned, then this IPO can account for a range of 20 – 30 % GMP.

Reasons for Raising Public Funds Through IPO

The company is well established with its local and international selling and enjoys the position of market leader in its segment. The reasons behind raising public funds are :

The company aims to make the payments to the creditors. Hence settling the borrowings of the company.
The company may also use the amount for meeting the general corporate purposes.

Company Financials

The company financials are as follows :

PARTICULARS (in million Rs.)	2019-20	2018-19	2017-18
ASSETS	4713	4257	3937
REVENUE	6730	6425	5346
NET PROFIT	31.68	7.38	-120.4

The company was previously a loss making company but with inception of pigeon brand the company has successfully transformed into profit making company. However the liabilities and creditors list is long. But the make noticeable factor is that the company has made almost 287.79 million Rs. of profit for the half year ending on 30th Sept, 2020. Hence the balance sheet for this year is going to be really impressive and the company’s earnings have taken a leap of almost 100% for the half year ending period.

Pros

Market leader in its segment
Wide range of products under its portfolio
Good and strong brand name
In house manufacturing facility
Great dealers network across India

Cons

Company has recently transformed into a profit making company due to sales from Pigeon brand. Hence the company is having major earnings from one product or brand name which makes it vulnerable as the profits are not shared equally across all the brands.
Company was in loss till 2018 and the profitability is less than 5% for the company.