Multibagger Stock to Watch: Inflame Appliances soars by ~50 per cent in one month alone; do you own it?

The shares of Inflame Appliances gained by ~50 per cent in one month alone while in one year the share price of multibagger Inflame Appliances is up by ~300 per cent.

In a recently held investor meet the management highlighted that Inflame Appliances is growing revenue at 15-20 per cent MoM and expects 50 per cent + CAGR over the next 5 to 7 years. The company expects to retain a 18-25 per cent profit margins.

Investors are attracted to Inflame Appliances as the company is emerging out to be not only as a contract manufacturer but also as a design company backed by strong R&D capabilities.

Inflame Appliances is expected to focus on products having import substitution opportunity from China.

The company management further announced that it won’t get into brand and distribution model and has stopped participating in govt. tenders. As far as revenue mix goes Chimney is 80% of revenue and will be 60%+ even after 5 years. The Chimney market in India is growing at 20% CAGR even as Inflame targets 40% market-share in next 5 years from 6% currently.

The company has a current capacity and utilisation at Panchkula as follows: -  Chimney 20,000 units/month (50% CU), Gas Stove 10,000 units/month (only glass-based, 50% CU), Hobs 5,000 units/month (started 2 months ago). The Panchkula plant is expected to have achieved peak utilization by Apr’22 from 50% currently.

As far as Capex goes Inflame Appliances will be investing ~Rs190mn including R&D facility and tools, doubling capacity with a new plant in Hyderabad.

The management in the investors emphasised that no other players has been successful in manufacturing Chimney in India and the new products in focus will be Dishwasher, OTG and Griller. The management also highlighted that the raw material availability is bigger challenge than high pricing. The product prices have been hiked by 25-40 per cent over the past 6-12 months. Currently the exports contribution is very small with the focus on Nepal, Bangladesh and African markets.

With the positive business outlook and bullish technical the stock of Inflame Appliances is expected to be in limelight in coming sessions.