Stove Kraft Q4 Review: Margin Headwinds Remain But Growth Getting Back On Track; Maintain Buy: Yes Securities

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Result Synopsis

StoveKraft's performance continues to be impacted by a large customer in modern retail going bankrupt and slowdown in e‐commerce channel which is still undergoing transition due to change in regulations. Exports were impacted on account of unavailability of the containers and steep hike in sea‐freight rates.

On the margin front, company is taking necessary price revision to defend gross margin levels of at least 31%. The management does not see any challenges in terms of demand and expects margin to recover as company has initiated 4‐5% price increase in Q1 and commodity prices have corrected from their peak.

Given the massive correction in the stock, we don't see further downside and therefore continue to remain positive on the stock and maintain our 'Buy' rating. We believe company should be able to grow in high teens and margins are also close to the bottom.

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