01 — At a Glance
The Heat Exchanger That Just Went From Startup to IPO Fever Dream
Freshly Listed (Oct 2024). KRN Heat Exchanger is a 7-year-old private company that raised ₹342 crores through an IPO five months ago and is now building expansion dreams on steroids. Q3 FY26 saw ₹153 crore revenue (+37.5% YoY), ₹23 crore PAT (+65% YoY), and EPS of ₹3.65 — which annualises to ₹14.60. Current P/E sits at 77.7x. That’s not a valuation multiple. That’s a lotto ticket disguised as industrial equipment.
- 52-Week High / Low₹1,032 / ₹590
- Q3 FY26 Revenue₹153 Cr
- Q3 FY26 PAT₹23 Cr
- Q3 FY26 EPS₹3.65
- Annualised EPS (Q3×4)₹14.60
- Book Value₹85.0
- Price to Book10.0x
- Dividend Yield0%
- Debt / Equity0.06x
- CRISIL RatingA- / Stable
IPO Auditor’s Take: KRN Heat raised ₹342 crore in October 2024 at ₹315/share. Five months later, stock is ₹850. That’s a 170% pop. Congratulations to everyone who got IPO allotment. For the rest of us entering now at 77.7x P/E, let’s just say the valuation has more runway reserved for lawyers than growth. Meanwhile, they’re building a new factory like their life depends on it, acquiring bus AC divisions mid-sprint, and claiming data centers will be “huge” in 4–5 years. The heat exchanger business is genuinely solid. The price is… let’s call it optimistic.
02 — Introduction: The Unsexy Business That Secretly Runs the World
You’ve Never Heard of Them. But Your Air Conditioner Definitely Has.
Heat exchangers are the unglamorous heroes of modern engineering. They sit inside your car’s AC, your office’s cooling system, your refrigerator, data centre chiller units, and literally every industrial machine that involves moving heat from A to B without melting. Nobody brags about their heat exchanger quality at dinner parties because heat exchangers are about as exciting as a tax filing cabinet.
Except when they’re not.
KRN Heat Exchanger is a Rajasthan-based manufacturer of precision-engineered aluminum and copper fin-tube heat exchangers, condensers, and evaporator coils. Founded in 2017 as a private company, it went public in October 2024 and has since been on a rampage. Q3 FY26 revenue hit ₹153 crore, up 37.5% YoY. Profit shot up 65%. They’ve already started commercial production at a brand-new facility in Neemrana. They just acquired a bus air-conditioning business mid-year because apparently scaling one business at a time is for mortals. And management is whispering about data center cooling fluids like it’s the next frontier.
This is a story about a young company operating in a boring industry, hitting growth numbers that venture capital would be jealous of, and getting valued like it’s the next SaaS unicorn. Let’s figure out if the price is rational or if the IPO just created a temporary stock market fever dream.
Concall Note (Feb 2026): Management on new facility ramp: “steady execution and improving operating performance as the business continues to scale.” Translation: We’re building this thing fast, and we’re hitting targets. What they didn’t say: Whether the stock price hitting 2.7x the IPO value was also part of the plan.
03 — Business Model: Why Copper and Aluminum Are Sexier Than You Think
They Make Metal Tubes That Move Heat. Sounds Boring. Margins Suggest Otherwise.
KRN’s business is deceptively simple: take copper and aluminum (raw materials that account for 60–65% of cost), design finned heat exchangers customized to OEM specifications, manufacture them across three product categories (evaporator/condenser coils, headers/copper parts, sheet metal parts), and deliver to a diversified base of customers across HVAC, refrigeration, industrial cooling, and automotive cooling.
The customer base is stacked: Daikin, Blue Star, Voltas, Carrier, Schneider Electric, Kirloskar, Knorr-Bremse (railways), Climaventa, and others. That’s not a customer list. That’s a who’s-who of engineering and manufacturing in India. Top 10 customers represent 72.31% of FY25 revenue — which screams concentration risk but also reflects the “approved vendor” moat that’s nearly impossible to replicate.
Manufacturing footprint: Two facilities in Neemrana, Rajasthan (industrial zone, lower cost, higher labour availability than Gujarat or Maharashtra). Capacity utilization hovering at 84–86% (pre-new-plant phase). A third facility under the subsidiary KRN HVAC Products started commercial production in May 2025 and is ramping to 20% utilization in FY26, targeting 50% in FY27.
Revenue mix (FY25 insights): Domestic: 84.31%. Exports: 15.69% (and they’re aiming for 30–35% in the next couple of years). This is the part that gets exciting: OEM approval in international markets is brutal, but once you get it, the moat is deep. New geometries for Europe and US markets are in development. Cost-down capability (design optimization reducing material use without compromising capacity) is a competitive edge vs US/EU suppliers.
Product Expansion Angle: New facility is making bar & plate heat exchangers, oil cooling units, and roll bond evaporators — product lines that older core operations couldn’t produce. This is backward integration meets horizontal expansion. Margin profile on newer products like bus AC is explicitly stated as “more than 20% gross margin,” vs the core business at lower teens. Margin accretion potential is real.
💬 Here’s the real question: If their top 10 customers are 72% of revenue, what happens when one of them decides to backward-integrate or switch suppliers? KRN management swears the moat is “approval locks” and “design stickiness.” Do you buy it?
04 — Financials Overview: Q3 FY26 Deep Dive
Revenue Flying, Profit Soaring. Valuation is… something else.
Result type: Quarterly Results | Q3 FY26 EPS: ₹3.65 | Annualised EPS (Q3×4): ₹14.60 | Current P/E: 77.7x
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 153.0 | 111.0 | 115.0 | +37.5% | +33.0% |
| Operating Profit | 31.0 | 15.8 | 18.0 | +96.2% | +72.2% |
| OPM % | 20.2% | 14.2% | 15.7% | +600 bps | +450 bps |
| PAT | 22.7 | 13.8 | 12.0 | +64.5% | +89.2% |
| EPS (₹) | 3.65 | 2.21 | 2.00 | +65.2% | +82.5% |
Margin Story — The Real Headline: Operating margin expanded to 20.2% in Q3 from 14.2% YoY. That’s a 600 basis-point jump. Management’s explanation on concall: backward integration (new facility producing sheet metal/header components = higher margin to KRN), inventory gains (metal prices held steady; sitting inventory gained value), and product mix (new higher-margin items like bus AC). But wait — there’s a land mine. They also said consolidated EBITDA is “nearly doubled” YoY while standalone revenue is being distorted by raw material pass-through. Read: Inter-company billing between KRN Heat and KRN HVAC makes consolidated numbers look better than standalone. This is fine (happens in holding structures) but requires investor translation.
Tax Rate Anomaly: Q3 FY26 shows an oddly low effective tax rate (12% vs the normal ~29–30%). Management confirmed: “calculation of the deferred tax.” Translation: Probably loss adjustment from earlier quarters or a one-off deferred asset write-back. Not recurring. Don’t annualise this low rate.
05 — Valuation: The P/E Elephant in the Room
At 77.7x P/E, Are We Pricing in India’s Entire Data Centre Future?
