As the Indian IPO market heats up, one of the most anticipated offerings is that of KRN Heat Exchanger and Refrigeration. With bidding dates set from September 25 to September 27, 2024, this IPO aims to raise ₹341.51 crore and could be a golden opportunity for investors looking to dive into the growing HVAC&R (Heating, Ventilation, Air Conditioning, and Refrigeration) sector.
About KRN Heat Exchanger
Founded in 2017, KRN Heat Exchanger specializes in manufacturing fin and tube-type heat exchangers primarily made from non-ferrous metals such as copper and aluminum. Their extensive product range includes:
- Condenser coils
- Evaporator units and coils
- Fluid and steam coils
- Sheet metal components
These products find applications in various industries, including air conditioning, refrigeration, and process cooling. The company’s commitment to quality is evident, as it holds certifications like ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, which speak to its high standards in quality management, environmental management, and occupational health and safety.
Financial Performance and Growth Prospects
KRN Heat Exchanger has demonstrated impressive financial growth in recent years. The revenue from operations has consistently increased:
- FY22: ₹156.11 crore
- FY23: ₹247.48 crore
- FY24: ₹308.28 crore
Similarly, the profit after tax (PAT) has also shown significant growth:
- FY22: ₹10.59 crore
- FY23: ₹32.31 crore
- FY24: ₹39.07 crore
This upward trajectory can be attributed to the company’s strong customer base, which includes industry leaders like Daikin Airconditioning India, Schneider Electric, and Blue Star. Furthermore, KRN has established a subsidiary, KRN HVAC Products Private Limited, to diversify its product offerings and enhance operational capabilities.
Strengths of KRN Heat Exchanger
- Quality Assurance: KRN maintains an in-house facility for rigorous quality checks, ensuring that products meet high performance and safety standards.
- Diverse Clientele: Their robust client base, including blue-chip companies, provides a significant revenue stream and indicates a strong market position.
- ISO Certifications: These certifications assure potential investors of the company’s commitment to quality and safety.
- Growth Potential: With expansion plans in place, KRN is well-positioned for continued growth in the HVAC&R sector.
Risks to Consider
Despite its strengths, KRN Heat Exchanger does face certain risks:
- Customer Concentration: A significant portion of revenue is dependent on a single client, Daikin Airconditioning India, which accounted for over 33% of revenue in FY24. Any loss or slowdown in orders from this major client could adversely impact KRN’s financial health.
- Dependence on Top Clients: The company relies heavily on its top 10 customers, which contribute over 72% of revenue. A decline in orders from these clients poses a risk to stability.
- Lack of Long-term Contracts: The absence of long-term agreements with customers may expose KRN to revenue volatility.
- Supply Chain Vulnerabilities: The company imports a significant portion of its raw materials, making it susceptible to geopolitical tensions and regulatory changes affecting imports.
- Regional Risks: KRN generates a considerable share of its revenue from Rajasthan. Any adverse developments in this region could impact business operations.
- Debt Obligations: As of July 2024, the company had outstanding borrowings of ₹63.04 crore, which could pose financial risks if repayment challenges arise.
Key Financial Metrics
KRN Heat Exchanger’s financial health is reflected in its key performance indicators:
- Market Capitalization: ₹1309.51 crore
- Return on Equity (ROE): 40.86%
- Return on Capital Employed (ROCE): 31.21%
- Debt/Equity Ratio: 0.45
- Profit After Tax Margin: 12.67%
These metrics showcase a company that is not only growing but also managing its resources effectively.
Application Details
For investors interested in participating in this IPO, here are the key details:
- IPO Date: September 25, 2024 – September 27, 2024
- Listing Date: October 3, 2024
- Face Value: ₹10 per share
- Price Band: ₹209 – ₹220 per share
- Lot Size: 65 Shares
- Total Issue Size: 15,543,000 shares (aggregating up to ₹341.95 Cr)
Investment Options:
| Application Type | Price Band | Apply Upto |
|---|---|---|
| Regular | ₹209 – 220 | ₹2 Lakh |
| High Networth Individual | ₹209 – 220 | ₹2 – 5 Lakh |
Minimum and Maximum Investment for Retail Investors
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 65 | ₹14,300 |
| Retail (Max) | 13 | 845 | ₹185,900 |
| S-HNI (Min) | 14 | 910 | ₹200,200 |
| S-HNI (Max) | 69 | 4,485 | ₹986,700 |
| B-HNI (Min) | 70 | 4,550 | ₹1,001,000 |
Analyst Insights
Analyst Dilip Davda views KRN Heat Exchanger as a strong player in the HVAC&R sector, citing its growth trajectory and solid market positioning. While the IPO appears fully priced based on FY24 earnings, it offers a compelling opportunity for medium- to long-term investors looking to enter a robust and growing sector.
Conclusion
In summary, KRN Heat Exchanger’s IPO presents an attractive opportunity for investors interested in the HVAC&R industry. With a strong financial performance, a diverse client base, and plans for expansion, KRN is well-equipped to navigate the challenges ahead. As the bidding dates approach, this IPO is certainly one to watch.
For more information, you can reach out to the registrar, Bigshare Services Pvt Ltd:
- Phone: +91-22-6263 8200
- Email: ipo@bigshareonline.com
Invest wisely and consider KRN Heat Exchanger as a potential addition to your portfolio!