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Stovekraft margins will improve further as operating leverage kicks in, says MD Rajendra Gandhi

Updated : February 24, 2021 12:50 PM IST

Rajendra Gandhi, Managing Director of Stovekraft on Wednesday said that EBITDA has improved on the back of operational levers. He also said that margins will improve further as operating leverage kicks in.

“EBITDA is a function of operating lever because our costs are covered at a certain point, at a certain revenue. We are already at twice the revenue of where we cover all our cost. So, beyond that, 80 percent of our gross margins float will be done and that is where you are seeing healthy EBITDA numbers,” he told CNBC-TV18.

Gandhi said that January has been good for the company and he expects Q4 to grow similar to Q2 and Q3.

“January month has been very good and in-line with our expectations. The business is a little skewed towards the second and third quarter; the first and last quarter are relatively smaller, but we are seeing very good traction in various categories of products that we sell. We hope that we continue to do at the same level of growth as what we have done for the last nine months.”

He further added that Stovekraft is more value-oriented and hence their gross margin is lower than peers.

“We are a value brand and that will reflect even in our numbers. Our gross margin number will be lower to other listed peers, but at EBITDA and PAT levels, we will fair at the level that they are at or even better,” Gandhi said.

He also said that they are adding more production lines as demand increases, while also adding that they are moving from traded goods to manufactured goods.

“What used to be a mix of 70:30 in the past, this year we have moved to 80:20. Going forward, we believe that this will further improve more towards manufacturing.”

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