Record Q1, margins expanded, IKEA delayed but long-term targets raised

Revenue 480.6 Cr (41.3% YoY), PAT 17.1 Cr (63.5% YoY) — validates claim historically

ICT at 27% of revenue; management later guided 20% contribution for FY27, implying moderation. Structural above pre-war but normalization acknowledged

Gross profit up 46% YoY, margins 127 bps higher — delivered as stated

Delivered 11.2%, exceeding prior 'protect 11%' guidance. Management confident of further expansion

Q1: zero revenue (not started). Q2: commencement confirmed. But now modeled as 5-6% of eventual business (~90-110 Cr), not 200-250 Cr

Prior guidance 200-250 Cr eventual target. Now stated as 5-6% of future business (likely 90-110 Cr at ~1800-1900 Cr revenue base). Still 'huge opportunity' but lower absolute expectation

Prior: 'protect and improve 11%'. Q1 delivered 11.2%. Now guided to 14-15% in 2-3 years vs prior baseline. ROCE improved to 13.9%, ROE to 9.3%

Q1 general trade growth 56.2% (strongest in 3 years). Had been muted for 2-3 years. Call indicates sustained momentum ahead

Q1 at 27% of revenue. FY27 guided to 'at least 20%' contribution. Implies normalization from spike (315.9% growth not sustainable)

Q2-Q3 larger quarters with festive season (Onam, Dussehra, Diwali spread). Manufacturing facilities now fully operational. Innovations delayed from Q1 now rolling out. Confident of strong performance. ICT has structural shift; non-ICT categories have pipeline. Overall quarters look very strong.

Cost-plus model: all input cost increases passed on. Prices raised for domestic and export. Favorable export pricing environment. Confident of current margin levels, improving from here. At least 1% gross margin improvement year-on-year targeted. Some headroom remaining.

Export was 12% last year, targeting 15% in next two years. IKEA treated as deemed export. Export growth continuing in Q1. Q2 is when IKEA business starts. Absolute numbers difficult to provide; will be part of export guidance. (Note: Prior target 200-250 Cr for IKEA eventually not restated; later clarified as 5-6% of business)

Financial leverage already setting in. Revenue growth + EBITDA expansion + fixed costs below EBITDA = all incremental flow to PAT. Will see this continuously quarter-on-quarter. No specific timeline given, but trajectory intact toward 7%.

Q2 historically strongest quarter. Will continue to be. Q1 stronger so Q2 will be in line with that. May not be exactly same growth rate as Q1 but very strong demand being witnessed. Growth across three categories.

Q1 we build inventory for the year. Historically Q4 FY25 was 75 days, Q1 FY25/FY26 at 69 days, now improved to 45 days. Moving to straight-line production plan. Irrespective of seasonal cycles, targeting uniform production. Overall only improving on working capital ratios.

Demonstration: addressing ICT market when SE Asia grappling with supply chain challenges. Very strong manufacturing capability. Very strong supply chain (both domestic and China imports). This differentiation vs peers is unique to Stove Kraft.

WS wholly owned subsidiary for domestic China purchases + export drawbacks. JV for triply manufacturing. Facility is largest/among largest in China. Installing machines. Commercial triply production by end-2026 or before December. Huge global + domestic demand. Induction cooking aggravated demand. Triply efficiency far higher than stainless steel.

Increase in four buckets: (1) Job work +1.2% (temporary outsourcing for ICT surge); (2) Marketing +1.2% (strategic 3.5-3.6% allocation); (3) Franchise commissions +1% (mix shifted from 43% to 56% franchise-operated); (4) CSR advance 94 lakhs (~3% of PBT, 1% above stipulated). Explained 3.5% of sales, offset by operating leverage, landing 18%. Will come down as these normalize.

YTD ₹7 Cr finance cost. Three components: (1) Fund-based (working capital lines) saved ₹2 Cr YoY; (2) ROU leases; (3) Asset lease (taken Q3 FY26) added ₹2 Cr. Overall as % of sales: 2.1% to 1.6% (improved). Most is indirect supporting; direct CCM interest portion not specified.

Confident of increasing gross margin at least 1% year-on-year. Ideally above 40%, settle between 40-42%. Financial leverage will play out. Trajectory toward 7%. (Note: to reach 18-20% ROE would require higher PAT margins; acknowledged as 'our endeavor')

Cost-plus model. Any input cost increase passed on. Challenges in input costs post-Q1 addressed by increasing realization for domestic and export. No worry; cost-plus ensures price increases follow. Arrangements with large suppliers on quarterly basis manage input cost.

On annualized basis, we still believe 2x of last year. (Implies 100% growth for rest of FY27, moderation from 315.9% Q1)

Combination of product mix, value growth, volume growth. All three contributed; ICT higher growth. Premiumization evident (stainless pressure cooker > aluminium). Continuous pricing increases for cost. Yes, 11% EBITDA sustainable. Confident at least 1% margin improvement YoY, targeting 14-15% range in 2-3 years.

No, not in Q1 reported. Q2 is when IKEA business is starting.

(Chandru) Premiumization is key theme. Stove Kraft building differentiated products for this. Creating category growth, not just riding wave. Non-induction growth target nearly 20% if we execute well. 15%+ growth consistently in categories we operate in. Given product development + innovations lined up.

Cost-plus model. When correcting prices, also addressing increased aspiration for gross margin. Price corrections carry embedded margin improvements beyond cost pass-through.

Regular Q1 occurrence. If not done, Q1 would be even softer. Everyday affair, every year. Good consumer response. EBOs grew 80%-odd, general trade 50%-odd from these programs. Not quantified. (Implication: material for Q1 but not disclosed separately)

(Rajendra) Three levers: cost control (mfg + operational), brand (youngest peer but volume leader many categories), distribution (across channels). Historically 17-18% CAGR (10 years). Innovation + China capabilities. Highly backward integrated, agile. Can develop products faster. Cost + distribution + brand unique combination. 15%+ range is not surprising. (Chandru) External factors: mature categories upgrading, impulse buying, economy growth (mid/upper-mid). Internal: most highly backward integrated, agile, quick innovation to market.

Beyond 2.5 lakhs/store/month is profitable. Currently at 4.3 lakhs/month. Target: stabilize at 5 lakhs/month.

IKEA supplies for global markets. UK large retailer already working. Walmart in US. Small other retailers. Enough potential in existing customers. Will add quality customers in years ahead.

Good traction, demand excess of pre-war levels. Confident ICT contribution at least 20% and little above as progress through year. (Implies monthly ~45+ Cr trending, from ~10 Cr pre-war baseline)

(Chandru) Fantastic movement in chimney category. Revamped entire range from AC motors to BLDC motors. Makes us ahead of competitors. Own retail to drive. Very competitive due to internal manufacturing. Building new designs/features. Tremendous potential. Pushing envelope on chimneys and built-in hobs.

Appreciate confidence in IKEA. Also very excited, high-quality business with learning. But business diversified into channels + products with huge innovation pipeline. At best, full-blown IKEA = 5-6% of business. Today is nothing. Multiple growth opportunities: chimneys (huge), triply (backward integrated before full investment), rice cooker (high traction), OTG, mixer-grinder headroom, EBOs (86% growth, years ahead), general trade recovery, exports. IKEA not underplayed, huge + exciting, but too many avenues.

South larger base, continue to grow. North bigger opportunities, smaller base. Absolute % growth faster in rest of country vs South. General trade growth opportunity % larger than rest. South strongest (50%), West, North, East. (Note: South ~50% of revenue, growing but slower; North/East/West growing faster % but from smaller base)

Q1 at 41.3% but acknowledges external tailwinds (GST, ICT spike). Festive Q2-Q3 large quarters. Management confident of continued strong performance

Q1 at 27%; implies moderation but demand above pre-war. 2x last year annualized basis (100% FY growth)

Premiumization-led; depends on innovation launches now underway; Chandru's specific target

Q1 delivered 11.2% (beat 'protect 11%'). At least 1% margin improvement YoY. Path to 14-15% by FY29-30 with operating leverage + product mix

Q1 +127 bps, cost-plus model ensures pass-through. Price increases for domestic + export ongoing

Currently 3.5%; financial leverage accelerating. Fixed costs below EBITDA means incremental flow to bottom line. Timeline not specified

China JV capacity under installation; commercial production by Dec 2026. Supports pressure cooker + cookware margin + mix improvement

Added 17 in Q1; retail momentum 86% growth. Target implies ~80+ stores/quarter, substantial but dependent on site availability + franchise interest

ICT at 27% of Q1 revenue, 315.9% growth. Management guided to 20% FY27 contribution, implying sequential moderation. If demand falls faster than expected, growth deceleration.

PAT margin at 3.5% despite 11.2% EBITDA (margin). Path to 7% long-term requires multiple quarters of execution; at current 13.9% ROCE, returns still below FMCG peers.

Prior guidance 200-250 Cr IKEA revenue. Q1 call modeled as 5-6% of future business (~90-110 Cr at 1800+ Cr revenue base). Absolute expectation reduced ~55-60%. Commercial ramp in Q2 unproven.

41% revenue growth driven partly by GST benefit (affordability), ICT war-driven spike (geopolitical), LPG crisis (induction shift). Once these normalize, underlying growth rate unproven.

NWC increased to 45 days (Q1 inventory buildup). If festive season demand slower than expected, inventory turn delayed and cash tied up longer.