Stove Kraft ( cmp 493) listed in August 2021 at around 780-800, went up to 1100 levels in October 2021 and since then has been in a consistent downtrend, and posted a low of 353 in March 2023 and since then seems to be attempting to come out of the woods. Recently it posted a swing high of 507 in May 2023 and then gapped down, and consolidated between 425 to 460 for a few weeks. After many trading days it has today managed to close slightly above 200 dema at 488. 30 WEMA is at 467.
On the GMMA charts it has formed a cup and handle pattern and seems to be breaking out of it. A simple trendline drawn from the top and joining subsequent lower tops shows stock price has broken out above falling trendline and now breaking out of a cup and handle . Potential targets, trendlines, necklines etc all marked on charts.
Fundamentals wise, company has given out presentations and does regular concalls ( material for doing research is available aplenty. Plus a look at its brand products on flikpart or other e commerce sites gives an idea about its products) . Basic premise is its a predominantly kitchen appliances company, also venturing into LED products, and modular kitchens etc. Enterprise value is around 1800 crores ( 1630 crores market cap plus nearly 170 crores net debt) Sales in FY 23 was at nearly 1300 crores. Its a company available at an EV to sales value of around 1.3. The thesis here could be reversion to mean in terms of margin improvement. Company has done backward integration into foundry in an attempt to have control on costs. If margins improve along with improvement in sales ( management has given an aspirational target of 2000 crores sales in next few years) , this is a company that can provide good returns.
Since this is a turnaround kind of a scenario, I have taken a starter position, based on the charts formation and will evaluate my positions going forward. Since the position is a small position, it gives me flexibility to add or reduce my positions as the situation unfolds. (This is not a recommendation and anyone contemplating investment should do their own diligence.)
