Blockbuster debut for KRN Heat Exchanger; shares list at 118% premium over IPO price

Shares of KRN Heat Exchanger and Refrigeration made a stellar debut on the domestic bourses on Thursday, with the stock listing at premium of 118% over the initial public offering (IPO) price. Undermining weak cues from the broader market, KRN Heat Exchanger shares listed at ₹480 apiece on the NSE against the issue price of ₹220. On the BSE, the stock opened 114% higher over the IPO price at ₹470 per share.

Post listing, shares of KRN Heat Exchanger gained as much as 126% to ₹497.89, while the market capitalisation rose to ₹2,969.47 crore.  On the BSE, the counter hit a high and low of ₹497 and ₹450, respectively. Meanwhile, the equity benchmark Sensex and Nifty were reeling under selling pressure, down nearly 1% each.

The blockbuster listing of KRN Heat Exchanger shares were better than Street expectations as the stock was commanding a grey market premium (GMP) of ₹235 in the unlisted market, suggesting listing to be around ₹455, up 106.8%.

“The company's expertise in fin and tube-type heat exchangers for HVAC&R applications, coupled with international quality standards, positions it well for growth. KRN Heat Exchangers benefit from quick turnaround times and strong relationships with leading clients. The company's consistent growth in both revenue and profitability further reinforces its appeal,” says Shivani Nyati, Head of Wealth, Swastika Investmart Ltd.

“Even though the IPO's valuation seems reasonable, it is difficult to draw direct comparisons because no peers have been listed. Nonetheless, investors may book a portion of the profit and keep the remaining amount because of KRN Heat Exchangers' excellent fundamentals and market demand,” she adds.

The ₹342-crore IPO of Rajasthan-based heat exchangers manufacturer, having price band at ₹209-220 per share, received an overwhelming response from investors, with the issue subscribing 213.41 times as it received bids worth ₹51,611.75 crore. The public issue saw record subscription in the non-institutional Investors (NII) category, receiving 430.54 times bids. The qualified institutional buyers (QIB) and retail portions were booked 253.04 times and 96.74 times, respectively. The company had reserved 50% of the shares in the public issue for QIB, 15% for NII, and the remaining 35% for retail investors. 

The IPO of KRN Heat Exchanger was a complete fresh issue of 1.55 crore equity shares with a face value of ₹10 each. There is no offer-for-sale component, so the entire IPO proceeds will be used by the company. Out of the raised capital, the heat exchangers' maker will invest ₹242.46 crore to set up a new manufacturing facility by its subsidiary KRN HVAC Products at Alwar, Rajasthan. The remaining fund will be used for general corporate purposes. The company has already spent ₹36.44 crore for this manufacturing facility till July 15.

KRN Heat Exchanger and Refrigeration is one of the leading manufacturers of fin and tube-type heat exchangers. The company manufactures copper and aluminium fins and copper tubes heat exchangers, water coils, condenser coils, and evaporator coils, which are used in the domestic, commercial, and industrial Heating, Ventilation, air conditioning and refrigeration (HVAC&R) industry. Its manufacturing facility is located in Neemrana, Rajasthan over an aggregated area of 7,800 square metre.

The company counts Daikin Airconditioning India Pvt Ltd, Schnieder Electric IT Business India Pvt Ltd, Kirloskar Chillers Private Ltd, Blue Star Ltd, Climaventa Climate Technologies Pvt Ltd and Frigel Intelligent Cooling Systems India Pvt Ltd among its key customers. It also exports products overseas to countries including UAE, USA, Italy, Saudi Arabia, Norway, Czech Republic, Germany, UK, and more.

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