The public issue of Stove Kraft, one of the largest Kitchen appliance suppliers in India, has subscribed 2.9 times on the second day of bidding, January 27.
The Rs 413-crore IPO has received bids for 1.7 crore equity shares against offer size of 58.94 lakh equity shares, the subscription data available on the exchanges showed. The offer size excluded anchor book portion which was finalised by the company with Rs 185 crore fund flow against equity shares issuance.
The retail investors remained at the forefront with subscription of 13.07 times against their reserved portion. The portion set aside for non-institutional investors was subscribed 1.85 times, while qualified institutional investors have put in 8.15 percent bids against the reserved portion.
The public issue opened for subscription on January 25 with a price band of Rs 384-385 per share. The offer consisted of fresh issue of Rs 95 crore and offer for sale of 82.50 lakh equity shares by promoters (Rajendra Gandhi and Sunita Rajendra Gandhi) and investors (Sequoia Capital India Growth Investment Holdings I and SCI Growth Investments II).
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"At the upper band of issue price, Stove Kraft will trade at a Price/EPS multiple of 12.0x of its annualised H1FY21 revenue, which is at a discount to its listed peer like TTK Prestige (45x), Hawkins Cookers (42.3x), and Butterfly Gandhimathi (284.3x)," said KR Choksey which believes that current price band is undervalued, looking at the growth potential in the company and anticipates listing gains and gives a subscribe rating to Stove Kraft IPO.
Stove Kraft manufactures and sells kitchen solutions under the brand name of 'Pigeon' and 'Gilma' and planning to manufacture value, premium, and semi-premium kitchen supplies under the 'Black + Decker' brand. Its product portfolio has 660+ kitchen solutions including cookware, cooking appliances, household utilities, and others.
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In 2019, the company also started manufacturing Pigeon LED products. Under the 'Pigeon' brand, it has 651 distributors in 27 states and 5 union territories and 12 distributors for exports and under the 'Gilma' brand, it has 65 stores across 4 states and 28 cities. It distributes its products in the Indian market and also exports them to countries like the USA, Mexico, Kenya, Qatar, Sri Lanka, Fiji, Bahrain, Kuwait, etc.
Stove Kraft has manufacturing facilities at Bengaluru (Karnataka) and Baddi (Himachal Pradesh). All Pigeon and Gilma branded appliances are manufactured at its Bengaluru unit and the Baddi facility focuses on Oil Company Business (OCB) to manufacture products like LPG stoves, inner lid cooker, etc.
The company will utilise the net proceeds from its fresh issue for repayment of certain borrowings (Rs 76 crore) and general corporate purposes.