1. At a Glance
KRN Heat Exchanger and Refrigeration Ltd walked into the markets in Oct 2024 with IPO swagger, raised ₹342 Cr, listed at optimism-fuelled valuations, and promptly discovered what gravity feels like. From a high of ₹1,010 to ₹673 today, the stock has delivered a brutal reminder that even “manufacturing + HVAC + PLI” doesn’t get lifetime immunity from valuation reality.
Market cap sits at ~₹4,183 Cr, while trailing twelve-month revenue is ₹552 Cr and PAT is ₹68 Cr. That’s a Price-to-Sales of ~7.6× and a P/E of ~61.6×—for a company whose ROE is a respectable but not god-tier 16.8%. The latest quarter (Q3 FY26) shows revenue of ₹153 Cr (+37.5% YoY) and PAT of ₹22.66 Cr (+65% YoY). On paper, the numbers slap. On valuation, the stock still behaves like it thinks it’s Nvidia with copper coils.
The balance sheet is clean-ish, debt is down to ₹30.5 Cr, promoters hold a chunky 70.8%, and the company is in aggressive expansion mode with a ₹300+ Cr new facility. So the big question—are we watching a future industrial compounder being temporarily punished, or a hot IPO learning humility in public?
Let’s open the hood.
2. Introduction
If you’ve ever stood under an air conditioner in May and whispered a silent prayer of gratitude, chances are a heat exchanger somewhere did its job without applause. KRN Heat Exchanger and Refrigeration Ltd lives in that unglamorous but essential corner of manufacturing—thermal management. No consumer brand recall, no Bollywood ads, just metal, copper, fins, tubes, and margins.
Founded as a B2B HVAC component supplier, KRN supplies critical heat exchanger parts to names like Daikin, Blue Star, Voltas, Carrier, Schneider Electric, and Kirloskar Chillers. Translation: if India builds more ACs, chillers, rail coaches, or industrial cooling systems, KRN wants a piece of that airflow.
FY25 was strong—revenue up 40.8%, PAT up sharply, and capacity utilization already north of 84% across most product lines. Q3 FY26 continued that momentum. But the market isn’t rewarding growth alone anymore; it’s asking uncomfortable questions about valuation, working capital bloat, customer concentration, and whether the ₹300 Cr expansion will age like fine wine or excess inventory.
So let’s decode this coil-by-coil.
3. Business Model – WTF Do They Even Do?
KRN
designs and manufactures fin-and-tube type heat exchangers used in HVAC and refrigeration systems. Think condensers, evaporator coils, oil cooling units, roll bond evaporators, and bar & plate heat exchangers.
If that sounded boring, good. Boring is profitable in manufacturing—when executed well.
Their products go into:
- Air conditioners (residential, commercial, bus ACs)
- Refrigeration systems
- Industrial cooling
- Oil & gas equipment
- Power generation systems
- Railways (recent vendor approval flex)
They operate two manufacturing facilities in Neemrana, Rajasthan, with utilization already hovering between 84–86%. That’s high. Almost suspiciously high. Which explains why management is throwing ₹300+ Cr at a new Alwar facility under a subsidiary (KRN HVAC Products Pvt. Ltd.).
The new plant aims to scale capacity up to 6 million units annually (scalable), with commercial production targeted from Q2 FY26. Ambitious? Yes. Necessary? Probably. Risky? Absolutely.
The client list is solid but concentrated. Top 10 customers contributed 72.31% of FY25 revenue. That’s not diversification; that’s a group chat where two people dominate the conversation.
Would you be comfortable if Daikin sneezed and your revenue caught a cold?
4. Financials Overview
Quarterly Performance Snapshot (Q3 FY26)
| Metric | Latest Quarter (Q3 FY26) | YoY Quarter | Prev Quarter (Q2 FY26) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 153 | 111 | 152 | 37.5% | 0.8% |
| EBITDA (₹ Cr) | 31 | 16 | 30 | ~94% | ~3% |
| PAT (₹ Cr) | 22.66 | 13.7 | 18 | 65.0% | 25.9% |
| EPS (₹) | 3.65 | 2.21 | 2.90 | 65.2% | 25.9% |
TTM EPS stands at ₹10.94, already baked into the scary 61× P/E.
Margins improved sharply this quarter—OPM touched ~20%, a solid recovery from mid-teen levels earlier in FY25. But before you celebrate, remember working capital days ballooned to 153 days. Revenue growth funded by cash
