The initial public offering (IPO) of KRN Heat Exchanger and Refrigeration saw a spectacular response from the investors during the first hour of the bidding process on day one. The issue, which kicked-off for bidding on Wednesday, September 25, was mostly subscribed by retail and HNI investors. The issue was fully subscribed in just 12 minutes.
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 4,81,75,400 equity shares, or 4.38 times, compared to the 1,09,93,000 equity shares offered for the subscription by 11.00 am on Wednesday, September 25. The three-day bidding for the issue will conclude on Friday, September 27.
The allocation for non-institutional investors (NIIs) was subscribed 8.64 times, while the portion reserved for retail investors saw a subscription of 5.01 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was yet to see any bids 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 240 in the unofficial market, suggesting a listing pop of about 110 per cent for the investors.
Brokerage firms, largely have a positive view on the issue and suggest to subscribe to it citing long-standing business relationships, increase in capacity, new product development, experienced promoters, consistent financial performance, high quality and innovative product range. However, dependence on select customers and increase in input costs are the major risks.
KRN Heat Exchanger specializes in manufacturing fin and tube type heat exchangers for HVAC&R industry and their products are primarily made from non-ferrous metals such as copper and aluminium. KRN plans to expand its capacity multi-fold which will generate increased growth in revenues from existing as well as new products, said Anand Rathi Reseach.
"Looking at the company’s experienced legacy along with its plan to expand internationally and rising demand in HVAC market which could aid KRN’s revenue and profit margin in 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 Heat Exchanger has established itself as a prominent manufacturer of fin and tube heat exchangers, a widely used product. The company has achieved this growth through its commitment to quality and customization. Export sales, characterized by high-volume orders and rising profitability, have played pivotal roles in strengthening its financial performance, said SMC Global.
"This facility will focus on producing bar and plate heat exchangers, oil cooling units with blowers and motors, and roll band evaporators. The expansion is expected to increase production capacity by six times, enabling KRN to enter new markets and industries. Long-term investors may find this growth potential attractive," it said.
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.