KRN Heat Exchanger and Refrigeration Ltd Q1 FY26 (Jun ’25) – ₹115 Cr Sales, ₹12.4 Cr PAT, P/E 103x, and a ₹300 Cr Expansion Dream
1. At a Glance
KRN clocked ₹115 Cr revenue in Q1 FY26 (+20% YoY) with ₹12.4 Cr PAT (+3.8% YoY). Stock trades at ₹884 with a P/E of 103 – more expensive than an iPhone 16 Pro Max on launch day. ROCE 20.8% is juicy, but EV/EBITDA at 63x feels like ordering pani puri at five-star hotel rates.
2. Introduction
KRN Heat Exchanger & Refrigeration Ltd (KHERL) is that fresh-out-of-IPO company everyone’s whispering about in Dalal Street canteens. Listed in Oct ’24 after raising ₹342 Cr, it manufactures the “lungs” of HVAC-R systems – condenser coils, evaporator coils, heat exchangers – the stuff that keeps your AC cool while your electricity bill burns.
Two Neemrana plants are running near full throttle (~85% utilisation). Client list includes Daikin, Voltas, Blue Star, Carrier – basically every AC brand your uncle argues about during Diwali sales.
But here’s the drama: KRN is expanding with a ₹300 Cr mega-plant in Alwar (capacity 6 million units annually) and already got vendor approval from Indian Railways. Exports form 16% of revenue today, but management wants 30–35% by FY26.
Sounds glamorous? Sure. But the market has already crowned them king with 100x earnings multiple – as if they were Tesla of HVAC. The only problem: Tesla makes headlines, KRN makes coils.
3. Business Model – WTF Do They Even Do?
In plain terms, KRN manufactures heat exchangers – devices that transfer heat from one medium to another. If that sounds boring, think of it this way: without KRN, your AC is just a noisy fan with extra electricity bills.
Product portfolio:
Condenser & Evaporator Coils – bread and butter.
Header/Copper parts, sheet metal parts – accessory bread.
Bar & Plate exchangers, oil cooling units – premium desserts.
Roll bond evaporators – future-ready tech.
Industries served: HVAC (Daikin, Blue Star), power generation, oil & gas, railways. With railway approval secured, expect every loco to sweat less thanks to KRN’s radiators.
Revenue Mix (FY25):
Domestic: 84%
Exports: 16% (targeting 30–35% by FY26).
Customer base: 113 clients, but top 10 form 72% of revenue. If Daikin sneezes, KRN catches cold.
In short: they’re a B2B backbone of cooling systems – invisible heroes. The problem is, invisible heroes rarely get 100x valuation.
Commentary: Revenue growth strong, but PAT growth flat. QoQ margins slipped. At 100x valuation, flat profits are like a comedy movie without punchlines.
👉 Question: Would you pay 100x for a coil maker just because Daikin is on their client list?
5. Valuation Discussion – Fair Value Range
a) P/E Method
EPS = ₹8. Industry average P/E ~30. Fair range = 30× → ₹240. Premium growth? Let’s stretch to 50× → ₹400.
b) EV/EBITDA
FY25 EBITDA ~₹70 Cr. EV ~₹5,386 Cr. EV/EBITDA = 77× vs industry 20×. Fair EV range (20–30×) → ₹1,400–₹2,100 Cr. Per share = ₹225–₹340.
c) DCF (Discounted Coil Fantasy)
Assume 25% CAGR for 3 years, then taper. Fair range pops at ₹300–₹500.
👉 Fair Value Range: ₹240 – ₹500. CMP ₹884 is well above this educational range.
Disclaimer: For educational purposes only. This is not investment advice.
