Inflame Appliances Ltd

Started in 2017, Inflame Appliances Ltd is engaged in manufacturing of LPG Gas Stove/cooktops and Sheet Metal Components. They manufacture Gas Stove/ Cooktops in various range like Gas Stove in Sheet Metal, Gas Stove with Toughed Glass (Optional Auto Ignition) with range of 4 Burners/ 3Burners/ 2 Burners and Sheet Metal Components for captive consumption in the state of Himachal Pradesh. Company has Marketing agreements with Indian Oil Corporation Limited to market, sell, distribute, and promote of LPG Stoves through Indane Distributers to domestic Indane Customers. They also made marketing arrangement with HPCL and BPCL for selling their products to their distributers and customers. IAL has also been part of PRIME MINISTER UJJWALA YOJANA (PMUY) launched by the Central Govt. of India for providing 5 Crore new gas connection to the people below poverty line in the country. This PMUY has created a huge demand for LPG gas stoves which helped IAL to achieve higher growth. The scheme is now being extended to other poor class of the country and name of the scheme is UJJAWALA PLUS, which would offer another 3 crore new connections. Company sell it's product under the brand 'Inflame' and Glass top LPG Stove in 2/3/4 burner in premium ranges for brands like 'Hindware' and 'Avaante'. On the financial performance front, IAL has posted turnover/net profits of Rs. 3.92 cr. / Rs. 0.06 cr. (FY16) and Rs. 18.06 cr. / Rs.0.46 cr. (FY17). For the period ended on 20th January 2018 it has earned net profit of Rs. 0.80 cr. on a turnover of Rs. 25.42 cr. For last three fiscals, it has posted an average EPS of Rs. 1.06 and an average RoNW of 20.02% on an equity base of Rs. 0.80 crore. Issue is priced at a P/BV of 3.97 based on its NAV of Rs. 13.59 as on 20.01.18 and at a P/BV of 2.23 on the basis of its post issue NAV of Rs. 24.17. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 22, against its listed peers like IFB Industries and TTK Prestige trading at a P/E of 89 and 29 respectively as on 01.03.18. Thus issue appears fully priced. On merchant banker's front, this is the 12th IPO in last three years. Out of last 10 listings, 1 opened at discount to offer price and the rest with a premium ranging from 5% to 20% on the day of listing. As per financials, company's performance is very good, RoNW is 20.02% for last three fiscals and issue is fully priced as per latest earnings. IAL is part of UJJAWALA yojana, which may help it to continue grow. So we give SUBSCRIBE rating to this SME IPO.

• 1 Mr Aditya Kaushik
• 2 Mr Dinesh Kaushik
• 3 Mr Amit Kaushik