KRN Heat Exchanger IPO opens for subscription; GMP at 110%. Should you bid?

The initial public offer (IPO) of KRN Heat Exchanger has opened for subscription on Wednesday and will be available for investors to bid till September 27.

The company proposes to use the net proceeds from the IPO for investment in wholly-owned subsidiary KRN HVAC Products for setting up a new manufacturing facility at Neemrana, Alwar, in Rajasthan. The remaining amount will be used for other general corporate purposes.

KRN Heat Exchanger IPO price band

The price band for the IPO, which is completely a fresh equity sale of 1.55 crore shares, is fixed at Rs 220 at the upper end.

KRN Heat Exchanger IPO GMP

In the unlisted market, the company's shares were trading with a GMP of 110% over the issue price ahead of the issue opening.

KRN Heat Exchanger IPO review

Analysts advised investors to subscribe to the IPO as there are bright growth prospects for the company in the future and the valuations are comfortable.

"At an upper price band of Rs 220, the IPO is attractively priced at a PE of 35x on FY24 basis. Multiple growth opportunities lie ahead for the company on account of low penetration of RAC in Indian households, rising demand for energy efficient HVAC systems in corporate offices, QSR, warehouses and commercial vehicle space and export opportunities," said Indsec Securities while assigning a subscribe rating.

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"Being a first generation entrepreneur with over 19 years of experience in manufacturing heat exchangers and refrigeration units has moved KRN from a single product to multi product company with long-standing business relationships with leading clientele and multi fold expansion in revenues in the coming years offers strong growth going ahead with consistent profitability. Hence, we recommend a SUBSCRIBE to the issue," said Reliance Securities.

Other details

KRN Heat Exchanger and Refrigeration (KRN) specializes in manufacturing fin and tube type heat exchangers for the heat ventilation air conditioning and refrigeration (HVAC&R) industry and their products are primarily made from non-ferrous metals such as copper and
aluminum.

The company customizes heat exchangers in various shapes and sizes to meet customer requirements and market demand with diameters ranging from 5 mm to 15.8 mm.

The product range includes condenser coils, evaporator units, evaporator coils, header/copper parts, fluid and steam coils and sheet metal parts for various cooling applications.

Heat exchangers transfer thermal energy from one fluid to another, while ensuring that the fluids do not mix. This process is facilitated by conduction, enabling the heat exchanger to heat or cool a substance.

In FY24, the company's revenue from operations increased 25% year-on-year to Rs 308 crore, while net profit after tax rose 22% year-on-year to Rs 39 crore.

Holani Consultants is the sole book-running lead manager for the IPO.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)