KRN Heat Exchanger And Refrigeration To Invest Rs 340 Crore In Subsidiary Post IPO
The issue's book-running lead manager justified the IPO's Rs 209–220 price band, citing the company's 19% Ebitda margin and 12–13% profit in last two years.
IPO-bound KRN Heat Exchanger and Refrigeration Ltd. will use Rs 340 crore from the net proceeds to invest in its subsidiary KRN HVAC Products Pvt., the company’s Chairman and Managing Director Santosh Kumar Yadav said.
The leftover from the total Rs 341.95 crore that the Rajasthan-based company aims to garner will be used for general corporate affairs, Yadav said.
The KRN Heat Exchanger IPO price band has been fixed at Rs 209–220 per share.
According to Ashok Holani, director of Holani Consultants Pvt., which is the book-running lead manager of the issue, the IPO was appropriately priced even though there was no listed peer company.
“With regards to the valuation of the company, we have considered various factors for arriving at this particular price band,” he said.
Holani highlighted that the most important parameter in setting the price band and choosing a valuation was the growth story of KRN Heat Exchanger.
“They are operating at a 19% Ebitda margin and have a profit of 12–13% in the last two years,” he said.
Holani said that the company's subsidiary will use the money to set up a manufacturing plant that may be one of the largest for heat exchange in India.
“The key strengths they have is their management, their workflow, they have employed over 40 engineers, their business is increasing on a yearly basis. These are the multiple factors we have taken into consideration and have been able to set up this particular price band,” he said.
Ashok Holani said that KRN Heat Exchanger is not just a B2B business but also a manufacturer of specialised coils.
“That’s why they are able to substantiate their double-digit profit margins of 12–13% in the last two years. Going forward, they will also increase their capacity. So that will help boost the numbers in the future,” he said.
IPO Details:
KRN Heat Exchanger and Refrigeration IPO will be open for subscription between Sept. 25 and Sept. 27. The entirely fresh issue of 1.55 crore shares is aiming to mop up Rs Rs 341.95 crore.
Investors in the retail category will have to buy a minimum of 65 shares, taking the least amount of investment to Rs 14,300 at the upper end of the price band. KRN Heat Exchanger IPO is expected to list at BSE and NSE on Oct. 3.
