The KRN Heat Exchanger IPO has garnered significant interest from investors on its first day of subscription, witnessing a full subscription within just 30 minutes of opening. The IPO, which launched on September 25, will close on September 27, with the company’s shares expected to be listed on October 3.

Key Highlights of KRN Heat Exchanger IPO:

1. Strong Subscription Demand:
   By the end of the day, the IPO had been subscribed 21.25 times, with the retail portion being subscribed 21.77 times and the non-institutional category seeing 46.01 times oversubscription.

2. IPO Size and Structure:
   The IPO aims to raise ₹342 crore through the issue of 1.55 crore fresh equity shares. There is no offer for sale (OFS) component.

3. Grey Market Premium (GMP):
   The grey market premium (GMP) for KRN Heat Exchanger IPO is currently ₹239. Based on the GMP trend, the stock is anticipated to list at around ₹459, indicating a potential 108.64% premium over the issue price.

4. IPO Price Band and Lot Size:
   The price band for the issue is set at ₹209 to ₹220 per share. Retail investors can apply for a minimum lot of 65 shares, requiring an investment of ₹14,300, with a maximum of 13 lots for a higher exposure.

5. Anchor Investor Allocation:
   Before the IPO launch, KRN Heat Exchanger raised ₹100.10 crore from 10 anchor investors, allocating 45.5 lakh shares at ₹220 per share.

6. Allotment and Listing Timeline:
   The allotment of shares is expected to be finalized by September 30, with shares being credited to successful applicants' demat accounts by October 1. The company's shares are likely to be listed on the BSE and NSE on October 3.

KRN Heat Exchanger's Business Overview:

KRN Heat Exchanger is a leading manufacturer of heat exchanger tubes primarily catering to the HVAC (heating, ventilation, air conditioning) and refrigeration industries. The company produces a variety of components, including evaporator units, coils, and header parts. With a growing market for energy-efficient solutions, the company’s robust product portfolio positions it well to capture future market opportunities.

For FY24, KRN Heat Exchanger reported a profit of ₹39 crore, showing significant growth from ₹11 crore in FY22. Its revenue, EBITDA, and PAT margins stood at ₹3,083 million, ₹585 million, and 12.6%, respectively, demonstrating solid financial performance.

Financial Objectives of the IPO:

The funds raised will be used to:

• Invest in a new manufacturing facility in Neemrana, Rajasthan, under the company’s wholly-owned subsidiary, KRN HVAC Products Private Limited.
• General corporate purposes, strengthening overall operations and growth strategies.

Should You Subscribe?

According to market analysts, the IPO appears to be a good opportunity for investors, particularly given the company’s growth prospects in the HVAC market, which is on an upward trajectory due to factors such as urbanization, rising disposable income, and increased demand for energy-efficient solutions.

• Fair Valuation: The IPO is priced at a P/E ratio of 25.3 times based on FY24 earnings, making it an attractively valued option in the current market.
• Expert Recommendation: Sagar Shetty, an analyst from StoxBox, recommends a ‘subscribe’ rating, highlighting the company’s strong fundamentals, financial stability, and its ability to leverage future market opportunities.

High-Risk Investors and Listing Gains:

For those looking to make listing gains, Arun Kejriwal, founder of Kejriwal Research and Investment Services, suggests that investors with a high-risk appetite may consider the IPO. He notes that while KRN Heat Exchanger operates as a vendor for various HVAC and refrigeration companies, those seeking short-term returns may find value in applying.

Conclusion:

KRN Heat Exchanger’s IPO has attracted significant attention due to its financial performance, market positioning, and potential for growth in the HVAC sector. With a solid subscription status and a robust GMP indicating potential listing gains, this IPO is worth considering for investors looking for a mix of short-term and long-term opportunities. However, as always, investors should assess their risk tolerance and consult with financial advisors before making any investment decisions.

Disclaimer: The views expressed in this article are based on market analysis and expert opinions. Investors should consult with certified financial experts before making investment decisions