Pigeon's electric cooking surge meets a new IKEA business

Ashish Kacholia added 58,000 Stove Kraft shares during July–September 2026, while foreign portfolio investors more than tripled their combined holding. The business behind Pigeon is changing on two fronts: electric cooking has brought a surge in domestic sales, and a cookware supply relationship with IKEA has started. Understanding those developments requires separating a sudden demand boost from the longer process of earning better returns on its factories.

The business behind Pigeon

Stove Kraft manufactures pressure cookers, cookware, induction cooktops, gas stoves and other kitchen appliances. Pigeon serves the value segment; Gilma sells kitchen products including chimneys and hobs. The company also sells licensed BLACK+DECKER kitchen appliances. Rajendra Gandhi founded the business in 1999 and remains its managing director. The promoter group held 55.59% at September-end.

Its manufacturing base is in Bengaluru and Baddi. Bengaluru makes a wide range of cookware and appliances, while Baddi makes inner-lid pressure cookers. Making components such as glass lids, valves and gaskets internally gives the company control over costs and production. It also means carrying factory costs before the associated sales arrive.

Products reach customers through distributors, online platforms, modern retail, exclusive stores and overseas customers. The model combines selling its own brands with manufacturing products for other retailers, including IKEA.

Why more sales had not meant much more profit

Revenue increased from ₹1,284 crore in FY23 to ₹1,607 crore in FY26. Over the same period, gross margin improved from 32.7% to 38.7%, and operating profit before interest, tax, depreciation and amortisation, or EBITDA, rose from ₹99 crore to ₹166 crore. Yet net profit moved only from ₹35.8 crore to ₹42 crore.

Depreciation rose from ₹31.7 crore to ₹79.5 crore as assets came into use. Finance costs increased from ₹16.5 crore to ₹27.2 crore, including lease-related costs. These charges absorbed much of the operating improvement. FY26 net margin was 2.6%, and management reported return on capital employed of about 13%.

In May, management said investment had been made progressively over four years and was designed to support around ₹3,000 crore in revenue. That describes the scale the assets were built for, rather than an order book or a sales forecast. The financial question is how quickly sales can grow against that cost base.

Exports also had an uneven year. US tariff uncertainty held back new product orders, and overseas customer inventory affected quarterly shipments. The December 2025 quarter's revenue fell 6.4% and profit fell 65.8%; festival timing also distorted the comparison. The June recovery therefore followed a mixed operating period.

How LPG uncertainty changed demand

The Iran conflict and uncertainty over LPG supplies encouraged households to buy induction cooktops. Stove Kraft could respond by shifting existing production lines and workers towards induction. This flexibility helped it capture demand without waiting for an entirely new factory.

Induction cooktop sales value rose 315.9% in April–June 2026, more than quadrupling, and contributed about 27% of company revenue. This is revenue growth, not a measure of unit growth. Total revenue rose 41.3% to ₹480.6 crore, EBITDA increased 50.9% to ₹53.8 crore, and net profit rose 63.5% to ₹17.1 crore. EBITDA margin reached 11.2%.

Capturing the rush involved trade-offs. Reallocating production restricted small-appliance availability, and that category's sales fell 2.2%; gas cooktop sales fell 6.9%. Some outsourced manufacturing helped bridge the production gap. A strong induction quarter did not mean every product category was expanding.

The sustainability question was raised directly with management in August. It said the initial spike had moderated, but demand remained above pre-war levels, and expected full-year induction sales to be roughly twice the previous year's. That expectation remains to be demonstrated over the remaining quarters. A durable appliance purchase can bring demand forward, so the initial growth rate is not a reliable continuing run rate.

What IKEA adds, and what the estimate means

Stove Kraft's partnership involves developing and supplying cookware for IKEA's global retail network, including ceramic alternatives to conventional non-stick coatings. The company invested ₹58 crore in dedicated tooling, machinery and supporting infrastructure and had been awarded three product lines. By the August earnings call, management confirmed that supplies had begun in the July–September quarter.

In May, management put the revenue potential of the awarded products at ₹200–250 crore when fully scaled. That is a capacity-based opportunity rather than confirmed FY27 revenue. In August, it described a fully developed IKEA business as potentially 5–6% of company revenue. The two comments use different bases and do not establish a fixed rupee contribution for the current year.

The relationship adds an overseas customer and a route to improving factory utilisation. Management expects its EBITDA contribution to be comparable to or better than domestic business, even though export gross margins differ. Revenue depends on product ramp-up, customer demand and the pace at which additional lines enter production. The partnership's value will become clearer through actual sales and cash generation.

Stores and products beyond the induction rush

The exclusive Pigeon network grew from 329 stores at March-end to 346 by June-end, spread across 23 states and 160 cities. Sales through the retail channel rose 86.3% in the June quarter, although it represented only 8.7% of revenue. General trade grew 56.2%, showing that the recovery extended beyond the exclusive outlets.

Management targets 500 stores by the end of 2027. Newer products, higher-value cookware and appliances, and wider distribution underpin its ambition for company growth above 15% and EBITDA margins of 14–15% over two to three years. These are management's objectives, not achieved results. Store additions need productive sales, and product launches need demand beyond the initial electric-cooking surge.

Cash improved, but obligations remain

FY26 operating cash flow reached ₹256.5 crore, against ₹129.9 crore a year earlier. About ₹119.2 crore came from working-capital movements, including a longer payment cycle to suppliers. The working-capital cycle fell from 64 days to 23 days, then rose to 45 days in June as the company built inventory for festivals. The FY26 cash release cannot simply be assumed to recur each year.

March-end borrowings were ₹2.4 crore, but this did not make the company free of financing obligations. Its balance sheet also carried ₹55.1 crore of current supplier credit and ₹59.5 crore of lease liabilities. Cash and bank balances totalled about ₹30.5 crore. The distinction matters when interpreting the sharp reduction in conventional bank debt. Its long-term credit rating was upgraded to A with a Stable outlook in December 2025.

Other risks include competition, raw-material prices, currency movements, product quality and after-sales service. At March-end, disputed tax and other claims totalled about ₹18 crore, excluding estimated interest of ₹7.1 crore; capital commitments were about ₹52.9 crore. Promoter control and transactions with related parties also remain relevant to governance monitoring. None of these amounts establishes that a loss will occur, but they are part of the financial exposure.

The FY26 auditor also drew attention to tax proceedings following searches in November 2023. Some assessments remained incomplete. Management did not expect a material adverse financial impact, and the audit opinion was not modified over this matter. The pending proceedings nevertheless remain a specific uncertainty to monitor.

What the investor additions actually show

Kacholia's holding increased from 576,916 shares, or 1.74%, in June to 634,916 shares, or 1.92%, in September. Foreign portfolio investors' combined holding rose from 404,134 shares to 1,335,262 shares, or from 1.22% to 4.03%. This was accumulation across a quarter; the exact purchase dates and prices cannot be inferred from the quarter-end balances.

The foreign-investor aggregate does not identify every buyer. Nor did all institutions add: Bandhan Small Cap's holding fell from 3.61% to 3.12%, while Mahindra Manulife Small Cap's fell from 2.10% to 1.81%. The ownership changes show increased exposure by some investors, without establishing their reasons or a consensus about the business.

Valuation and the next operating test

At the rounded 15 October closing reference price of ₹846, equity value was about ₹2,800 crore. That is approximately 67 times FY26 earnings per share of ₹12.68, about 58 times trailing earnings per share of ₹14.68, and 5.6 times March book value of roughly ₹152 per share. These are dated reference multiples. The strong June quarter improves the trailing earnings denominator, but one quarter cannot establish a lasting level of profitability.

The next test is whether higher demand translates into better returns on the manufacturing assets already built. Induction sales after the initial rush, actual IKEA revenue, growth in the rest of the portfolio and cash conversion will provide more evidence than the ownership changes alone.

1. 1
   Induction demand

   Sales after the initial surge and progress against management's full-year doubling expectation

2. 2
   IKEA ramp-up

   Actual revenue, product-line additions and margins rather than capacity-based potential

3. 3
   Other products and stores

   Growth beyond induction and sales productivity as the retail network expands

4. 4
   Profit conversion

   Whether EBITDA growth produces stronger net margins and returns on capital

5. 5
   Working capital and obligations

   Inventory, supplier-payment days, supplier credit and lease liabilities alongside bank borrowings