KRN Heat Exchanger IPO: Financials to cash flows—10 key risks you must know before subscribing to the ₹342-crore issue | Stock Market News

KRN Heat Exchanger IPO: The initial public offering (IPO) of KRN Heat Exchanger and Refrigeration Limited opened for subscription on Wednesday, September 25, 2024. The mainboard IPO of the leading fin and tube-type heat exchanger manufacturer will remain open for bidding till September 27, 2024.

KRN Heat Exchanger IPO, worth ₹342 crore, comprises a fresh issue of 15,543,000 equity shares. There is no offer-for-sale component in the issue. The price band has been fixed at ₹209 to ₹220 per equity share with a face value of ₹10. The lot size is 65 equity shares, and thereafter, it will be in multiples of 65 equity shares.

Also Read: KRN Heat Exchanger IPO Day 1: GMP, subscription status, review, other key details. Apply or not?

KRN Heat Exchanger IPO details

The floor price is 20.90 times the face value, and the cap price is 22 times the face value of the equity shares. The price-to-earnings ratio based on diluted EPS for the financial year 2024 at the upper price band is 25.32 times, compared to the Nifty 50 PE ratio of 22.90 times. 

KRN Heat Exchanger IPO has reserved not more than 50 per cent of the shares in the public issue for qualified institutional buyers (QIB), not less than 15 per cent for non-institutional Institutional Investors (NII), and not less than 35 per cent of the offer is reserved for retail investors.

The company, in consultation with the book-running lead manager (BRLM), undertook a pre-IPO placement of 4,77,000 equity shares for cash consideration aggregating ₹954 lakhs. 4,57,000 equity shares have reduced the issue size. Holani Consultants Private Limited is the lead manager for the KRN Heat Exchanger IPO, and Bigshare Services Pvt Ltd is the registrar for the issue.

Also Read: KRN Heat Exchanger IPO fully subscribed within the first half-hour of day 1

Tentatively, KRN Heat Exchanger IPO basis of allotment of shares will be finalised on Monday, September 30, and the company will initiate refunds on Tuesday, October 1, while the shares will be credited to the demat account of allottees on the same day following refund. KRN Heat Exchanger share price is likely to be listed on BSE and NSE on Thursday, October 3.

The company plans to use the proceeds from the Fresh Issue to finance an investment in its wholly-owned subsidiary, KRN HVAC Products Private Limited, by providing equity. This investment will establish a new manufacturing facility in Neemrana, Alwar, Rajasthan. The remaining funds will be allocated for general corporate purposes.

KRN Heat Exchanger Company Details

The company’s promoters are Santosh Kumar Yadav, Anju Devi, and Manohar Lal. Santosh Kumar Yadav and Anju Devi collectively possess 4,39,99,960 equity shares, which accounts for 94.39 per cent of the company’s issued, subscribed, and paid-up equity share capital. The company has no competitors in India engaged in a similar line of business.

Also Read: KRN Heat Exchanger IPO: Price band set at ₹209-220 apiece; check issue details, 10 key things to know from RHP

The firm produces heat exchangers with fins and tubes for the HVAC (heat, ventilation, air conditioning) and refrigeration industries. It mostly uses copper and aluminium as non-ferrous metals for its heat exchangers. The company’s product line comprises sheet metal components, header/copper parts, evaporator units, evaporator coils, and fluid and steam coils.

KRN Heat Exchanger IPO: 10 key risks you must know before subscribing to the ₹342-crore issue

1.The company has no long-term contracts with any of its customers. If these customers decide not to purchase their products from them, it could result in financial instability and operational uncertainty, which could negatively impact their business and financial situation.

2.The company relies heavily on raw materials from its vendors in Malaysia, South Korea, Thailand, Vietnam and China. In FY24, FY23, and FY22, the import purchases accounted for 78.17 per cent, 79.08 per cent and 72.16 per cent of its total raw materials purchased. Any country-related risk or any change in government policies in relation to import of goods from any country or region may adversely affect the sourcing of raw materials which may have an adverse effect on our business, operations and financial conditions.

3.The company must acquire, renew, or uphold specific statutory and regulatory permits and approvals to conduct its business. Failure to do so promptly or at all could adversely affect the company’s business, financial status, operational outcomes, and cash flow.