Stove Kraft shares up 112% since March low; Buy stock for 56% upside, says Emkay Global

Stove Kraft Ltd is up 112 per cent from its March low of Rs 410.10 but Emkay Global believes the stock still looks attractive at 13 times estimated September 2026 EV/Ebitda, which is at 46 per cent discount to TTK Prestige Ltd. Emkay Global has initiated coverage on the stock with a 'Buy' rating, saying the kitchen and home appliance player is growing significantly ahead of peers on massive cost-leadership, led by deeply-entrenched manufacturing; strong new product innovation capabilities and strategic ‘value for money’ positioning.

Emkay Global also likes Stove Kraft on improving distribution expansion, including new-age channels such as e-com and  modern retail. "It has emerged as the leader in several high-growth categories, along with rapidly improving exports positioning (largest exporter; supplies to Walmart). Potential mass-consumer demand cycle recovering after 2 tough years and Stove Kraft's sharply enhanced manufacturing edge (gross block up 3 times in 4 years, with end of capex cycle amid increasingly restricted imports) will drive 15 per cent/33 per cent revenue/EPS CAGR over FY24-27E, with strong free cash flow yield of 5.6 per cent," Emkay Global said.

The brokerage suggested a target price of Rs 1,350 per share for Stove Kraft. The scrip closed at Rs 862.90 on Friday. Emkay Global's target price suggests a 56 per cent potential upside on the counter. Stove Kraft's valuations are attractive, based on strong earnings per share CAGR, led by market share gains amid potential industry demand recovery, significant operating leverage, strong improvement in cash generation as capex cycle nears its end, with improving return ratios, Emkay Global said.

"We believe SKL would gain significantly from operating leverage, given the i) ahead-of-industry 4-year (FY20-24) capex cycle (in turn, accentuating manufacturing edge over peers) coming to an end which could potentially double revenue on current capacities, ii) increasing restriction on imports (BIS norms), and iii) mass-consumer demand cycle now potentially improving after 2 tough years. This, along with rapid growth in exports (on expansion in product offerings and entry into the UK market vs largely US retail now), would act as robust growth tailwinds," it said.

Stove Kraft has sharply outperformed peers -- 15 percentage points revenue share gains over FY16-24, driven by improvement in categories like non-stick cookware, pressure cookers, and other small appliances (form 85-90 per cent of sales, combined). The company is also emerging as the market leader in products like induction cooktops, air fryers, and electric kettles despite being only a recent entrant here (entered electric kettles, air fryers only 3-4 years ago). 

"Deeply entrenched manufacturing capabilities (92 per cent revenue from in-house manufactured products now against 70 per cent three years ago) with backward-integration into component manufacturing (injection molding, sheet metal, PCB manufacturing, motor manufacturing, etc) have led to multi-fold rise in the gross profit/EBITDA pool share as well," Emkay Global said.