KRN Heat Exchanger IPO subscribed 47x on Day 2 so far; NII portion booked 104 times

The initial public offering (IPO) of KRN Heat Exchanger and Refrigeration saw a spectacular response from the investors during the second day of the bidding process. The issue, which kicked-off for bidding on Wednesday, September 25 was booked a total of nearly 24 times on first day subscription.

Rajasthan-based KRN Heat Exchanger is selling its shares in the price band of Rs 209-220 apiece. Investors can apply for a minimum of 65 shares and its multiples thereafter. It is looking to raise Rs 341.95 crore via IPO, which is entirely a fresh share sale of 1,55,43,000 equity shares.

According to the data, the investors made bids for 52,18,47,885 equity shares, or 47.47 times, compared to the 1,09,93,000 equity shares offered for the subscription by 2.35 pm on Thursday, September 26. The three-day bidding for the issue will conclude on Friday, September 27.

The allocation for non-institutional investors (NIIs) was subscribed 105.54 times, while the portion reserved for retail investors saw a subscription of 48.20 times. However, the quota set aside for qualified institutional bidders (QIBs) saw bids for 1.58 times for their allocations as of the time.

KRN Heat Exchanger and Refrigeration is a manufacturer of fin and tube-type heat exchangers, offering copper and aluminium fins and copper tubes, heat exchangers, water coils, condenser coils, and evaporator coils. All the products offered are used in the domestic, commercial, and industrial heating, ventilation, air conditioning and refrigeration industry.

The grey market premium of KRN Heat Exchanger has been hinting it as a multibagger in making, leading to a bumper bidding. Last heard, the company was commanding a premium of Rs 250 in the unofficial market, suggesting a listing pop of about 115 per cent for the investors.

KRN Heat Exchangers demonstrates strong growth potential with revenue growth of 25 per cent in FY24. The company has an impressive Ebitda margin of 19 per cent. Despite high working capital days, KRN delivered healthy ROCE and ROE , indicating strong profitability, said Nirmal Bang Securities.

"Although there are no direct peers, upon comparing KRN with AC outsourcing and heat exchanger companies in the listed space, its lower valuations despite superior return ratios suggest the company is undervalued. Thus we recommend subscribing to the issue," it said.

"Looking at the company’s experienced legacy along with its plan to expand internationally and rising demand in the market which could aid KEN's revenue and profit margin in the long run. Therefore we believe that this issue may be considered for its long term growth. Hence we give 'subscribe for for long term' rating to this IPO," it said.

Ahead of its IPO, KRN Heat Exchanger and Refrigeration has raised Rs 100.1 crore from 10 anchor investors by allocating 45.5 lakh shares at Rs 220 apiece. It has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs) and 35 per cent for the retail investors. Remaining 15 per cent shares all be allocated towards non-institutional investors (NIIs).

KRN has established itself as one of the top players in fin and tube-type heat exchangers for the HVAC&R industry using non-ferrous metals like copper and aluminum. KRN is known for quality and innovation partners with leading industry players and strategically expanding its global reach and enhancing operational efficiency, said Reliance Securities.

"Being an 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," it added with a 'subscribe' tag.

Holani Consultants is the sole book running lead manager of the KRN Heat Exchanger IPO, while Bigshare Services is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with Thursday, October 3 as the tentative date of listing on the bourses.