KRN Heat Exchanger’s ₹342-Crore IPO: Opening Soon with Key Details

KRN Heat Exchanger and Refrigeration Ltd. is set to make its market debut with an initial public offering (IPO) opening for subscription on September 25, 2024, and concluding on September 27, 2024. The company has announced a price band of ₹209 to ₹220 per share for its ₹342-crore IPO, making this an enticing opportunity for investors interested in the HVAC and refrigeration sector.

Key Details of the IPO

The IPO comprises a fresh share sale of approximately 1.55 crore equity shares, valued at ₹342 crore at the upper end of the price band. Investors can participate by applying for a minimum of 65 equity shares in one lot, with multiples thereafter. This IPO presents a unique opportunity for both institutional and retail investors to engage with a company that specializes in manufacturing fin and tube-type heat exchangers.

The funds raised from this IPO, estimated to be around ₹242.5 crore, will be strategically utilized for significant investments in the company's wholly-owned subsidiary, KRN HVAC Products. Specifically, the investment will be directed towards setting up a new manufacturing facility located in Neemrana, Alwar, Rajasthan, with the remaining capital earmarked for general corporate purposes.

Company Background

Based in Rajasthan, KRN Heat Exchanger manufactures essential components for the heat ventilation, air-conditioning, and refrigeration industries. The company operates from a consolidated manufacturing facility that spans two industrial plots within the RIICO Industrial Area in Neemrana, showcasing its robust operational capabilities.

KRN Heat Exchanger has established long-standing relationships with prominent industry players such as Daikin Air Conditioning India Pvt. Ltd., Schneider Electric IT Business India Pvt. Ltd., Kirloskar Chillers Pvt. Ltd., Blue Star Ltd., and Climav Climate Technologies Pvt. Ltd. These partnerships not only validate the company's credibility but also reflect its commitment to quality and innovation in manufacturing.

Financial Performance

In terms of financial health, KRN Heat Exchanger reported a net profit of ₹39.07 crore with a revenue of ₹313.54 crore for the fiscal year ending March 31, 2024. This marked an impressive improvement compared to the previous fiscal year, where the company posted a net profit of ₹32.31 crore on revenues of ₹249.89 crore. These positive financial indicators are likely to instill confidence among prospective investors.

The company has also recently engaged in a pre-IPO placement round, raising ₹9.54 crore by offering 4.77 lakh equity shares at ₹200 per piece. This placement reflects investor interest and provides a solid foundation as the company transitions into its public offering.

Allocation and Management

Regarding the distribution of shares in the IPO, approximately 50% of the issue size is reserved for qualified institutional buyers, 35% for retail investors, and the remaining 15% for high net-worth individuals. This structure aims to ensure a balanced allocation while maximizing investor participation.

Holani Consultants has been appointed as the sole book-running lead manager for this public issue, while Bigshare Services Pvt. Ltd. serves as the registrar. The allotment for the KRN Heat Exchanger IPO is anticipated to be finalized by September 30, 2024, with a tentative listing date set for October 3, 2024.

Should You Invest?

With the KRN Heat Exchanger IPO approaching, potential investors should evaluate the company's strong financial performance, strategic partnerships, and growth prospects within the rapidly expanding HVAC sector.

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However, as with any investment, it is crucial to assess individual risk tolerance and investment goals before making a decision.