KRN Heat Exchanger IPO Day 2: GMP, subscription status, review, other key details. Apply or not?

KRN Heat Exchanger IPO: The initial public offering of heat exchanger tube manufacturer KRN Heat Exchanger is witnessing strong buying interest from retail and non-institutional buyers. The issue opened for subscription on Wednesday, September 25, with an aim to raise about ₹342 crore. Ahead of the IPO, the company raised ₹100.10 crore from 10 anchor investors. The company allocated 45.5 lakh equity shares to anchor investors at a price of ₹220 per share. The book-built IPO, which is entirely a fresh issue of 1.55 crore shares and has no offer for sale (OFS) component, will conclude on Friday, September 27.

KRN Heat Exchanger IPO subscription status

As per BSE data, around 4:30 pm on the second day of subscription on Thursday, the issue had seen an overall subscription of 57.53 times. 

The portion reserved for retail investors was subscribed 54.98 times, while the non-institutional investors' category had seen a subscription of 134.19 times. By that time, the QIB segment of the issue had seen a subscription of 3.16 times.

On the first day of subscription, the issue was subscribed 24.09 times.

KRN Heat Exchanger IPO key details

The mainboard IPO opened for public subscription today. Let's take a look at the 10 key details of the KRN Heat Exchanger IPO:

1. KRN Heat Exchanger IPO GMP: Stock market sources pointed out that the shares of the company are trading at a premium in the grey market, reflecting investors' enthusiasm.

The grey market premium (GMP) of the KRN Heat Exchanger IPO rose to ₹251 from ₹239 on Wednesday. Considering the current GMP trend and the price of the issue, the stock is expected to be listed at a premium of 114.09 per cent at ₹471 on the Indian bourses.

2. KRN Heat Exchanger IPO price band: The issue's price band has been set at ₹209 to ₹220 per share.

3. KRN Heat Exchanger IPO date: The mainboard IPO opened for subscription today (Wednesday, September 25) and will conclude on Friday, September 27.

4. KRN Heat Exchanger IPO size: The issue is entirely a fresh issue of up to 1,55,23,000 shares of face value of ₹10 each, with an aim to raise nearly ₹342 crore.

5. KRN Heat Exchanger IPO lot size: The minimum lot size for an application is 65 shares. With the issue's upper price band at ₹220, the minimum amount of investment required by retail investors is ₹14,300. The maximum lot size for retail investors is 13.

6. KRN Heat Exchanger IPO allotment date: The company is expected to finalise the share allotment on Monday, September 30.

Successful applicants will likely get the shares credited to their demat accounts on Tuesday, October 1, while those who do not receive an allotment may expect refunds to be processed on the same day.

7. KRN Heat Exchanger IPO registrar: Bigshare Services Private Limited is the official registrar of the issue.

8. KRN Heat Exchanger IPO listing: The company's shares are proposed to be listed on the BSE and the NSE tentatively on Thursday, October 3.

9. Object of the issue: According to the company's RHP, the company wants to use the net proceeds from the issue to invest in its wholly-owned subsidiary KRN HVAC Products Private Limited for setting up a new manufacturing facility at Neemrana, Alwar, Rajasthan. Some parts of the issue will be used for general corporate purposes.

10. Company overview: The company manufactures heat exchangers with fins and tubes for the HVAC (heat, ventilation, air conditioning) and refrigeration industries.

Its product line comprises sheet metal components, header/copper parts, evaporator units, evaporator coils, and fluid and steam coils.

The company reported a profit of nearly ₹11 crore for FY22, which rose to over ₹32 crore in FY23 and ₹39 crore in FY24.

KRN Heat Exchanger IPO: Apply or not?

Some experts are positive about the IPO due to the company's growth prospects and the fair valuation of the issue.

"The HVAC market in India is on a strong growth trajectory, fuelled by rapid urbanisation, 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," said Sagar Shetty, a research analyst at StoxBox.

"The issue is valued at a P/E (price-to-earnings ratio) of 25.3 times, on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a 'subscribe' rating for the issue," said Shetty.

Shetty pointed out that the company’s strategy to de-risk its customer portfolio aims to expand its customer base across geographies and effectively enhance its existing product spectrum.

Underscoring the company's financial performance, Shetty said its revenue, EBITDA and PAT (profit after tax) stood at ₹3,083 million, ₹585 million and ₹391 million, respectively, for FY24. The EBITDA and PAT margins stood at 18.9 per cent and 12.6 per cent, respectively. The company has maintained RoE (return on equity) and RoCE (return on capital employed) of 29.7 per cent and 24.2 per cent, respectively, while D/E (debt-to-equity ratio) was at 1 time.

According to Arun Kejriwal, the founder of Kejriwal Research and Investment Services, investors with a high-risk appetite can bet on the issue for listing gains.

“The company is not developing any end-user product. It is making heat exchangers for the refrigerator and air conditioner maker companies. So, they are like vendors to various AC and refrigerator maker companies. However, looking at the overcrowded Indian primary market, those with a high-risk appetite can apply for listing gains only,” said Kejriwal.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.