Live news , top stories, corporate news, company news, sector news, economy news, results analysis news, ceo interviews, fund manager interview, advisor interview, market news, bazaar talk, hot stocks news, ipo news, commodities news, mutual fund news, insurance news, news wire
08 March, 2021 13:01 IST
Mehta Equities review on Stove Kraft IPO
Source: IRIS | 25 Jan, 2021, 02.39PM
Rating: NAN / 5 stars.
Comments  |  Post Comment

Kitchen appliances maker Stove Kraft opend its Rs 4,130 million maiden public issue for subscription on January 25 and the same will close on January 28. The price band for the offer has been fixed at Rs 384-385 per share.

Commenting on the Stove Kraft IPO, Prashanth Tapse, AVP Research Head, Mehta Equities said, "We believe the growth in kitchen appliances in India is huge and expected to grow by CAGR ~12% largely driven by the high growth in the large kitchen appliances segment where products of Stove Kraft like freestanding hobs and cooktops are well positioned with leadership market share."

"Before making an informed decision in this IPO we need to understand Stove Kraft IPO is going public mainly through "offer for sale" and such IPOs are expected to receive less demand during IPO from quality investors as investors remain less optimistic as fund proceeds from the shares sold would go into the pocket of the existing shareholders (Sequoia Capital India Growth) and less towards company future growth. Hence considering this it is generally predicted that such IPO generate low returns," Tapse said.

"In addition to above fact we are also concerned on sustainable business growth ahead of cutthroat competition in all the segments of Kitchen appliance despite the fact that the company has reported good numbers in the first six months. Other point investors has to consider is that the IPO reservation for retail is only 10% Vs 35% in majority of the IPO Books due to net worth being negative in the last 3 financial years because Stove Kraft has suffered one time losses (Rs 1,100 million) in 2016 from TN govt contact," he added.

"On valuations parse at upper price band (Rs 385/-), the issue is asking for market cap Rs 12,530 million with PE 16x times (annualised FY21e) vs. industry average P/E at 42x, which seems offer is at discount to peers valuations due to its low ROCE (2.51%) justifying the discount offer. Hence considering all the above factors and considering the risk in current volatile equity markets a moderate to low risk investors can give a miss to the offer while high risk investors can 'Subscribe' for listing gains," recommended the research head.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


 Post Comment
Name Email
Security Code type    into this box
Easy Trip Planners IPO Note: Motilal Oswal - 08-Mar-2021 14:02
Just Dial zooms on signing advertising pact with Star India - 08-Mar-2021 13:38
Sayaji Hotels soars as its subsidiary inks pact for seven new properties - 08-Mar-2021 13:20
Rushil Decor rallies on starting regular commercial production at Andhra Pradesh Unit - 08-Mar-2021 12:43
AGEL commissions 100 MW Gujarat Wind Power Project 5 months before schedule - 08-Mar-2021 12:30
NMDC surges on fixing iron ore prices - 08-Mar-2021 12:19
Meera Industries jumps on winning export order worth USD 180,000 - 08-Mar-2021 12:03
Jagran Prakashan plans to buyback shares worth Rs 1,180 mn - 08-Mar-2021 09:27
Kotak Mahindra Bank divests 10% stake in ECA Trading Services to its arm - 08-Mar-2021 09:07
Hero MotoCorp February sales crosses 5 lakh units - 05-Mar-2021 17:57
PVR launches new six-screen property in Mysuru - 05-Mar-2021 16:55
Home  |   Shares  |   F&O  |   Mutual Funds  |   Loans  |   Insurance  |   News Centre
Wealth Tracker  |   Newsletters  |   Tax Corner  |   NRI Centre  |   Advertise
© All rights reserved. IRIS Business Services Limited
A Disclaimer