Is the KRN Heat Exchanger IPO the next big opportunity in 2024? Let’s dive into the key details and see if this offering holds the potential for your investment portfolio.
Introduction
Founded in 2017, KRN Heat Exchanger and Refrigeration Limited is a key player in the HVAC&R industry, manufacturing copper and aluminum fin and tube-type heat exchangers. The company serves major clients like Daikin and Blue Star with products like condenser coils and evaporator coils. KRN exports 33% of its products globally, and its Neemrana facility supports both domestic and international markets.
With an expansive production facility in Neemrana, Rajasthan, KRN is well-positioned to meet both local and international demand. Its exports reach countries such as Germany, USA, and UAE, demonstrating its global presence. KRN’s continuous innovation and strong client base drive its growing reputation in the industry.
Now, the company is launching an IPO to raise funds for further expansion, aiming to build a new manufacturing facility. This move aligns with KRN’s goal to scale production and capture more market share, especially in international markets.
Overview of KRN Heat Exchanger IPO
KRN Heat Exchanger and Refrigeration Limited is all set to launch its IPO from September 25 to September 27, 2024. The company aims to raise ₹341.5 crores through this IPO, which is a book-built issue. The IPO consists entirely of a fresh equity issue without any Offer For Sale (OFS) component. Shares will be listed on BSE and NSE.
Key Details at a Glance:
| IPO Details | Information |
| Issue Open | September 25, 2024 |
| Issue Close | September 27, 2024 |
| Price Band | ₹209 – ₹220 per share |
| Market Lot Size | 65 shares |
| Total Issue Size | ₹341.5 crores |
| Listing Date | October 3, 2024 |
| Face Value | ₹10 per share |
| Retail Investor Quota | 35% |
| QIB Quota | 50% |
| NII (HNI) Quota | 15% |
Application Investment Breakdown:
| Category | Lots | Shares | Amount (₹) |
| Category | Lots | Shares | Amount (₹) |
| Retail (Min) | 1 | 65 | ₹14,300 |
| Retail (Max) | 13 | 845 | ₹185,900 |
| S-HNI (Min) | 14 | 910 | ₹200,200 |
Financial Performance: Solid Growth
KRN Heat Exchanger and Refrigeration Ltd has shown impressive financial growth over the last few years. Below is a snapshot of the company’s financials:
| Year (₹ in Crores) | FY 2023 | FY 2024 |
| Revenue | ₹249.89 | ₹313.54 |
| Profit After Tax (PAT) | ₹32.31 | ₹39.07 |
| Assets | ₹148.76 | ₹258.36 |
The company’s Revenue grew by almost 25.5% from 2023 to 2024, reflecting its strong market presence and expansion strategy. The Profit After Tax also improved significantly, marking a 21% increase during the same period.
Key Performance Metrics:
| Metric | Value |
| Return on Equity (ROE) | 40.86% |
| Return on Capital Employed (ROCE) | 31.21% |
| EBITDA Margin | 18.96% |
| PAT Margin | 12.67% |
| Debt-to-Equity Ratio | 0.45 |
These metrics are a solid indicator of the company’s ability to generate profits and effectively manage its capital structure.
Why Should You Consider KRN Heat Exchanger IPO?
1. Expansion Plans
KRN Heat Exchanger and Refrigeration Ltd plans to use the proceeds to fund the setup of a new manufacturing facility at Neemrana, Alwar in Rajasthan. This will significantly boost the company’s production capacity, allowing them to serve both domestic and international markets better. The facility will be operated by its wholly owned subsidiary, KRN HVAC Products Pvt Ltd.
2. Impressive Clientele
The company serves several major clients like Daikin Airconditioning India Pvt Ltd, Kirloskar Chillers Pvt Ltd, and Blue Star Ltd. It also exports its products to markets in USA, Germany, UAE, Italy, and other countries, making up around 33% of its total revenue.
3. Strong Financial Health
With a debt-to-equity ratio of just 0.45, KRN Heat Exchanger is financially sound. Its high Return on Equity (40.86%) and PAT margins (12.67%) further reflect its operational efficiency and profitability.
4. Attractive Pricing
With an IPO price band of ₹209-₹220 per share, the offering looks reasonably valued, particularly when considering the company’s Earnings Per Share (EPS) of ₹8.69 (based on FY 2024 data). The IPO’s focus on long-term growth makes it an attractive option for investors.
Risk Factors
- Competitive Market: The HVAC&R sector is highly competitive, with several established players in both the domestic and global markets. Any shift in customer preference could impact KRN’s growth.
- Dependence on Key Clients: A significant portion of the company’s revenue comes from a few key clients. Any changes in these relationships could affect the company’s revenue stream.
- Economic Fluctuations: The company’s revenue is closely tied to industrial and commercial real estate development, which can be subject to economic fluctuations. A downturn could slow KRN’s growth trajectory.
Should You Invest?
If you are looking for a long-term investment, KRN Heat Exchanger IPO could be a solid bet. Its impressive growth, expansion plans, and financial health make it a strong contender in the HVAC&R space. However, as with any investment, it’s important to assess your risk tolerance and financial goals before making a decision.
