KRN Heat Exchanger IPO: 3 risk factors, subscription status, allotment date, should you avoid? Here's what analysts say
Analysts also highlighted three risk factors about the company; high customer concentration, raw material supply risk, and industry & backward integration risk.
The initial public offer (IPO) of KRN Heat Exchanger IPO received a decent response from subscribers by 15.57 times on the first day (September 25) of the bidding process. However, also fully subscribed within a few minutes after the opening of the sale.
IPO | KRN Heat Exchanger | Subscription status
At the last count (02:39 PM), it received a total bid of 17,20,82,040 shares against a 1,09,93,000 shares offer, according to the BSE website.
IPO | KRN Heat Exchanger | Should you apply or not?
With two more days to go, should you invest in an IPO or not? Analysts from SBI Securities, including Sudeep Shah, and Sunny Agrawal, have recommended investing in the IPO.
IPO | KRN Heat Exchanger | Price band and lot size
The price range for the IPO offer is between Rs 209 and 220 per share and lot size is 125 shares.
IPO | KRN Heat Exchanger | What analysts say
According to SBI Securities' Analysts, investors can apply for the KRN Heat Exchanger IPO with a long-term horizon.
"We recommend subscribing to the issue for long-term investment horizon," the analysts said.
The company is valued at a FY24 P/E multiple of 35.0x based on its post-issue capital, the brokerage said.
IPO | KRN Heat Exchanger | EBITDA, PAT, CAGR
"The issue appears promising due to the company's strong growth track record, with revenue, EBITDA, and PAT growing at a CAGR of 40.5 per cent, 86.1 per cent, and 92.1 per cent, respectively, from FY22 to FY24," SBI Securities said.
KRN Heat Exchanger IPO | Three risk factors
The brokerage also highlighted three risk factors about the company; high customer concentration, raw material supply risk, and industry & backward integration risk.
KRN Heat Exchanger IPO | 3 Risk factors
Customer concentration risk: The company's reliance on a limited number of customers, with 33 per cent of FY24 revenue from Daikin Airconditioning and 72 per cent from its top 10 customers, poses a significant risk to its business.
KRN Heat Exchanger IPO | 3 Risk factors
Raw material supply: KRN's supply chain is heavily reliant on third-party suppliers for raw materials. This poses risks, including delayed customer deliveries and financial impacts due to supplier delays or quality issues. The company imported 78 per cent of its raw materials in FY24.
KRN Heat Exchanger IPO | 3 Risk factors
Industry & backward integration risk: KRN's business is closely linked to the HVAC industry's performance. Economic downturns, recessions, or industry disruptions can significantly impact the company's financial condition.
Where will investment in IPO proceed?
The company will utilise IPO proceeds to establish a new manufacturing unit in Rajasthan, to expand the product portfolio, and distribution network.
IPO | KRN Heat Exchanger | Last date to apply
The IPO will conclude on September 27.
IPO | KRN Heat Exchanger | Allotment date
The allotment is expected on September 30, 2024.
IPO | KRN Heat Exchanger | Listing date
The listing is expected on October 3, 2024. Here are other details of the IPO:
- BRLMs: Holani Consultants Private Ltd
- Registrar: Registrar Bigshare Services Private Ltd