1. At a Glance
KRN Heat Exchanger and Refrigeration Ltd (KHERL) designs and manufactures fin-and-tube heat exchangers for HVAC and refrigeration industries — basically the organs that help machines keep their cool. With ₹5,343 Cr market cap, ROCE 20.7%, and ROE 16.8%, it’s not shy of financial flex. The kicker? A triple-digit P/E of 100 and 10.7× book value — the market has priced this like it’s a climate control monopoly for Mars colonisation. Debt-light, expansion-heavy, and with PLI incentives worth ₹141.72 Cr in its back pocket, KRN’s story is as much about capacity growth as it is about investor expectations.
2. Introduction
If stock markets had a Tinder profile, KRN would be that new entrant with perfect selfies, adventurous bios, and zero visible flaws — but you just know the first dinner bill will sting.
IPO-fresh and riding an order book momentum wave, this HVAC component specialist has not just caught the post-COVID manufacturing revival tailwind, it’s practically strapped a turbocharger to it. A brand-new Neemrana plant is operational, vendor approval from Indian Railways is in, and the company is positioning itself as a PLI scheme beneficiary for the white goods industry.
The danger? At 100x earnings, investors are pricing in a flawless growth script. Any slip — even a 2% drop in quarterly margins — and the stock’s valuation can chill faster than the products it sells.
3. Business Model (WTF Do They Even Do?)
KRN makes fin-and-tube type heat exchangers — critical components for:
- Air conditioners
- Refrigerators
- Commercial HVAC
- systems
- Industrial cooling units
They design, manufacture, and supply to OEMs, providing customised thermal solutions for heating/cooling fluids. The company’s end-users span consumer durables, railways, and industrial setups.
Revenue mix is dominated by HVAC and refrigeration, with potential scale-up in transport cooling (railways). A recent R&D subsidiary, Thermotech Research Laboratory, hints at ambitions for higher-value, possibly proprietary, tech.
4. Financials Overview
- FY25 Sales: ₹430 Cr (↑40.1% YoY from ₹307 Cr in FY24)
- FY25 EBITDA: ₹70 Cr (16% margin)
- FY25 PAT: ₹53 Cr (↑35.9% YoY)
- EPS (TTM): ₹8.58
- Recalculated P/E: ₹860 ÷ ₹8.58 ≈ 100.2
- Debt: ₹33 Cr (down from ₹87 Cr in FY24)
- Cash from Ops FY25: ₹21 Cr — positive but small relative to capex push
Commentary: Strong topline growth and decent margins, but P/E is 5× industry median. Even HVAC units would sweat under this valuation heat.
5. Valuation
Method 1 – P/E
EPS = ₹8.58
Industry Median P/E ≈ 33×
Fair Value = ₹8.58 × (33 to 40) = ₹283 – ₹343
Method 2 – EV/EBITDA
EBITDA
