KRN Heat Exchanger IPO Sees Significant Interest Amid Strong Market Performance

The initial public offering (IPO) of KRN Heat Exchanger, a prominent heat exchanger tube manufacturer, has attracted substantial interest from retail and non-institutional investors. The subscription phase commenced on Wednesday, September 25, and aims to raise approximately ₹342 crore. Preceding the IPO, the company successfully secured ₹100.10 crore from 10 anchor investors by allocating 4.55 million equity shares at ₹220 each.

This book-built IPO, which is purely a fresh issue with no offer for sale component, is set to conclude on Friday, September 27. Based on data from the Bombay Stock Exchange (BSE) at 4:30 PM on the second subscription day, the IPO was subscribed 57.53 times. The retail investors’ segment saw a subscription level of 54.98 times, while non-institutional investors subscribed 134.19 times. Meanwhile, the Qualified Institutional Buyer (QIB) segment reported a subscription of 3.16 times. On its debut subscription day, the IPO saw a subscription of 24.09 times.

Stock market sources indicate that the shares are trading at a premium in the grey market, as the grey market premium (GMP) for KRN Heat Exchanger IPO increased to ₹251 from ₹239. This trend hints at shares listing at a potential premium of 114.09% on the Indian stock exchanges.

The IPO is priced within a band of ₹209 to ₹220 per share, with a lot size of 65 shares. Retail investors are required to invest a minimum sum of ₹14,300 at the upper price band. The allocation date for shares is projected for Monday, September 30, and shares may be credited to demat accounts by Tuesday, October 1. Bigshare Services Private Limited serves as the official IPO registrar.

The company’s shares are likely to be listed on both the BSE and NSE on or around Thursday, October 3. KRN Heat Exchangers aims to channel the funds raised into its wholly owned subsidiary, KRN HVAC Products Private Limited, to establish a new manufacturing facility in Neemrana, Alwar, Rajasthan, including some allocations for general corporate expenditures.

KRN Heat Exchanger specializes in manufacturing heat exchangers with fins and tubes for the HVAC and refrigeration sectors. The company has reported rising profits, from nearly ₹11 crore in FY22 to over ₹39 crore in FY24, capturing the attention of market experts who regard the IPO favorably, given the company’s growth prospects.

Sagar Shetty, a research analyst at StoxBox, notes that the Indian HVAC market’s trajectory, bolstered by urbanization, rising incomes, and energy-efficiency needs, bodes well for the company. “The issue is valued at a P/E of 25.3 times at the upper price band based on FY24 earnings, which is fair,” he stated, recommending a ‘subscribe’ rating for potential investors.

Arun Kejriwal, founder of Kejriwal Research and Investment Services, advises investors with a high-risk appetite to consider the IPO for listing gains. He elaborates that the company does not produce end-user products but operates as a vendor to other large manufacturers, making the IPO suitable for risk-tolerant investors.

Investors are encouraged to seek expert advice before making investment decisions.