Stove Kraft consecutively delivers weak performance yet again in the fourth quarter of financial year 2022-23. Weak demand and margin slump to multi quarters low disappoints the street and stock tanks 11 percent in trade on May 30 noon.

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While revenues stood 6 percent higher at Rs 278 crore, margins declined to 2.1 percent at the earnings before interest, tax, depreciation and amortisation (EBITDA) level. The fourth quarter witnessed a net loss of Rs 6.5 crore versus a net profit of Rs 9 crore year on year.

The finance cost rose to Rs 6 crore versus 1.2 crore year on year. Employee costs and other expenses also jumped 47 percent and 40 percent respectively.

Rajendra Gandhi, Managing Director at Stove Kraft while interacting with CNBC-TV18, said, "Demand is tepid and is affecting margins, distribution network could not meet the sales targets". He added, "E-commerce channel growth is muted but growth in retail and export segments have been good."

The company is focused on expanding its gross margin. In the fourth quarter, gross profit margin declined to 32.2 percent versus 33.5 percent year on year. EBITDA margins is expected to come back to its original levels of 11 percent by end of first half of financial year 2023-24.

Also read: Stovekraft: Butterfly-Crompton deal won’t impact us, will continue to grow faster than market

The short term debt as on 31st March 2023 has doubled to Rs 119 crore versus Rs 63 crore year on year. Gandhi said "We will bring down debt in the next 3 quarters to previous levels".

The fourth quarter earnings have disappointed investors and the stock now trades below its listing price.

(Edited by : Pradeep John)