| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 209 to ₹ 220 | 65 | 25th Sep, 2024 – 27th Sep, 2024 | ₹341.95 Cr |
About KRN Heat Exchanger and Refrigeration Ltd IPO
KRN Heat Exchanger and Refrigeration Ltd. (KHERL) is involved in the manufacturing of fin and tube type heat exchangers for the Heat Ventilation Air Conditioning and Refrigeration (HVAC&R) industry. KHERL manufactures heat exchangers of various shapes and sizes, as per the requirement of the client. The company’s product portfolio consists of condenser coils, evaporator units, evaporator coils, header/copper parts, fluid & steam parts and sheet metal parts. Their products find application in a range of air conditioning, heating & ventilation, refrigeration and process cooling application. KHERL is able to generate a majority of its income from sales of condenser cells (55.2%) and evaporator coils (37.5%). The company’s manufacturing operations are carried out at its consolidated manufacturing facility consisting of two industrial plots, located in RIICO industrial area, Rajasthan. KHERL also incorporated a wholly owned subsidiary (KRN HVAC Products Pvt. Ltd.) on 7th April 2023 to further expand its product range and aims to forward integrate to venture into the distribution and sales channel. The company has a customer base consisting of Daikin, Schnieder, Kirloskar Chillers, Blue Star, Climaventa and Frigel among others. The company derives 33.3%/55.1%/72.3% from its top 1/top 5/top 10 customers. The company relies on a limited number of suppliers for raw materials, with top 1/top 5/top 10 suppliers supplying 14.9%/57.7%/78.0% of the materials. The company also plans to set up a new manufacturing facility in Neemrana, Rajasthan with an aim to diversify its product portfolio.
Objective of the KRN Heat Exchanger and Refrigeration Ltd IPO
The net proceeds from the fresh issue will be used towards the following purposes:
- Investment in its wholly owned subsidiary KRN HVAC Products Private Limited in the form of equity, for setting up a new manufacturing facility at Neemrana, Alwar, Rajasthan (“proposed project”); and
- General corporate purposes.
Rationale To Invest In KRN Heat Exchanger and Refrigeration Ltd IPO
Comprehensive manufacturing setup along with quality control ensures customer stickiness
KHERL’s consolidated manufacturing unit is equipped and capable of carrying out end to end manufacturing activities. The company is equipped with full service capabilities under one roof, enabling them to meet the varying requirements of clients. Such a setup enables the company to command control over quality and ensure cost advantages. KHERL also maintains an in-house facility for quality checks of its products. The products undergo various quality control checks to ensure quality products to their clients. The comprehensive quality check facility enables the company to track the quality of its materials and products throughout their manufacturing lifecycle, ensuring correct delivery of its products to its clients, which in turn helps the company to maintain healthy long-term relationships.
Strategic expansion of product portfolio and customer base to strengthen business visibility
KHERL has served a total of 112 customers during FY23, selling their products across 17 states and exports to nine countries. Owing to the high contribution of the top 10 clients to its revenue pool, the company aims to mitigate this risk by expanding its customer network and introduction of new product designs. The company plans to expand its customer base by improving its sales and distribution network while expanding its presence in other regions to reach out to a larger market. The company plans to enhance its existing product portfolio and product design to cater to a wide spectrum of clients, ensuring that the company is well positioned to capitalize on emerging market opportunities while being able to cater efficiently to its existing customer base.
Valuation of KRN Heat Exchanger and Refrigeration Ltd IPO
KHERL is engaged in the manufacturing of fin and tube type heat exchangers for HVAC&R industry. The company has been able to maintain healthy long term relationships with many clients on the back of its ability to cater to the varying requirements of its clients. The company also boasts a comprehensive manufacturing unit which enables end-to-end production and active quality control, ensuring cost advantages and quality products. In addition, with KHERL’s strategy to de-risk its customer portfolio, the company is aiming to expand its customer base across geographies and effectively enhance its existing product spectrum. On the financial front, the company’s Revenue/EBITDA/PAT stood at Rs. 3,083 million/585 million/391 million for FY24. The EBITDA and PAT margins stood at 18.9% and 12.6%, respectively. Additionally, the company has maintained ROE/ROCE of 29.7%/24.2%, while D/E was at 1x. On the macro front, the HVAC market in India is on a strong growth trajectory, fuelled by rapid urbanization, rising disposable incomes, various government initiatives and the increasing need for energy-efficient solutions amidst changing climatic conditions. On the back of such development, the company is well equipped to leverage multiple economic and industrial tailwinds, further strengthening its position in the market. The issue is valued at a P/E of 25.3x on the upper price band based on FY24 earnings, which is deemed to be fair. Therefore, we recommend a SUBSCRIBE rating for the issue.
What is the KRN Heat Exchanger and Refrigeration Ltd IPO?
KRN Heat Exchanger IPO is a book built issue of Rs 341.95 crores. The issue is entirely a fresh issue of 1.55 crore shares. KRN Heat Exchanger IPO opens for subscription on September 25, 2024 and closes on September 27, 2024. The allotment for the KRN Heat Exchanger IPO is expected to be finalized on Monday, September 30, 2024. KRN Heat Exchanger IPO will list on BSE, NSE with tentative listing date fixed as Thursday, October 3, 2024. Login to your account now.
How to apply for the KRN Heat Exchanger and Refrigeration Ltd IPO through StoxBox?
To apply for the KRN Heat Exchanger and Refrigeration Ltd IPO through StoxBox one can apply from the website and also from the app. Click here
When will the KRN Heat Exchanger and Refrigeration Ltd IPO open?
KRN Heat Exchanger and Refrigeration Ltd IPO is opening on 25th September 2024.Apply Now
What is the lot size of the KRN Heat Exchanger and Refrigeration Ltd IPO?
The Lot Size of KRN Heat Exchanger and Refrigeration Ltd IPO is 65 equity shares. Login to your account now
When is the KRN Heat Exchanger and Refrigeration Ltd IPO allotment date?
The allotment Date for KRN Heat Exchanger and Refrigeration Ltd IPO is 30th September 2024. Login to your account now.
When is the KRN Heat Exchanger and Refrigeration Ltd IPO listing date?
The listing Date for KRN Heat Exchanger and Refrigeration Ltd IPO is 03rd October 2024. Login to your account now
What is the minimum investment required for the KRN Heat Exchanger and Refrigeration Ltd IPO?
In the Retail segment the minimum investment required is Rs. 14,300. Login to your account now
What is the maximum investment allowed for the KRN Heat Exchanger and Refrigeration Ltd IPO?
In the Retail segment the maximum investment requirement is Rs. 185,900. Login to your account now
What are the risks associated with investing in the KRN Heat Exchanger and Refrigeration Ltd IPO?
- The company derives a majority of its revenue from its top 10 customers. In addition, the company also does not have any long term contracts with any of its customers. Thus, a delay or cancellation of orders by any such customer will have adverse material effect on the operations of the company.
- The company relies on top 10 of its suppliers for 80% of its supplies. Any delays or cancellation of supplies from the supplier will have adverse effects on the operations of the company.
- KHERL does not have any long-term contracts with any of its suppliers. Further they are heavily dependent on overseas suppliers to ensure quality supplies as per quality specifications. Any shortfall in the supply of raw materials or an increase in raw material costs or other input costs or any country specific challenges may adversely affect the pricing and supply of products.
When will the KRN Heat Exchanger and Refrigeration Ltd IPO shares be credited to my Demat account?
The KRN Heat Exchanger and Refrigeration Ltd IPO be credited to the account on allotment date which is 01st October 2024. Login to your account now
Where can I find the KRN Heat Exchanger and Refrigeration Ltd IPO prospectus?
The prospectus of KRN Heat Exchanger and Refrigeration Ltd IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to KRN Heat Exchanger and Refrigeration Ltd IPO?
| IPO Open Date | Wednesday, September 25, 2024 |
| IPO Close Date | Friday, September 27, 2024 |
| Basis of Allotment | Monday, September 30, 2024 |
| Initiation of Refunds | Tuesday, October 1, 2024 |
| Credit of Shares to Demat | Tuesday, October 1, 2024 |
| Listing Date | Thursday, October 3, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on September 27, 2024 |
